Creating a product or service and managing it online is a process that is more and more professional and business-oriented. So, pricing your products accurately is one of the strategies you can use to set your brand apart and get ahead of your competitors.
We know that many people look for quality services, however, that’s not all they’re looking for. Quality material, good prices, and convenient payment methods catch the buyer’s eye.
So, knowing how to price your product is also an excellent marketing strategy. After all, the price you set for your services can be a great way to reach new clients and even make the ones you already have loyal.
That’s why we’ve written this post. To help you understand how you can better calculate the sales price of your products and services.
In this text, you’ll find information about:
Enjoy the read!
Pricing your products accurately
When you know how to fix prices for your products or services it means that you understand the relationship between the total investment made from the production to the marketing strategies used. Meaning that you need to assess all variables you’ve used to create your product. The price of your product must always be in accordance with the value it offers.
But you also need to calculate the price by taking into account the perception of value the buyer persona has regarding the item you’ll sell.
And how can you find out all this information?
You need to research and understand what people’s real pains and problems are. Therefore, when you create your product, you’ll be able to create something that really adds value to the buyer.
This will make you notice the importance the audience attributes to the product you’ve created based on the benefits it offers to buyers. So, pricing has a direct relationship with the cost and benefits you have to offer.
Besides, another factor that must be taken into account when pricing products, is the demand for what you’re offering. The scarcity or abundance of a product in the market is a primary factor that determines different values to a product or service.
When something is very sought after and also with an abundance of production, there are many competitors. So, people have more options to choose from and many will feel more inclined towards cheaper products.
Whereas when a product is extremely sought after but there aren’t many options in the market, its sale price can be higher. Scarcity makes the product more valuable.
So, pricing your products is knowing how to correct set an economic value for what you’ve created, taking all these variables into consideration.
What’s the best pricing strategy?
Even before you choose a strategy to price your products, you need to understand that calculating the sales price serves always the same purpose: increasing the sales volume and profiting from what was created.
Once you’ve calculated all variables that influence the price of your product, you can start thinking of high-ticket or low-ticket.
But do you know what those are?
When we talk about high-ticket, we’re referring to products with a high market value, meaning those considered “expensive” if compared to similar products in the market.
It may look like a bad strategy if you’re trying to sell lots of items. However, high-ticket items are not always a bad idea. Besides, pricing depends on the type of product you’re selling.
When you have a unique product that does not yet exist in the market or with little competition, it’s interesting to launch it with a higher price. You can justify your price choice by being an innovative product.
Plus, choosing the launch strategy of high-ticket products is a good initial option. You can launch your product in the market at its maximum price and slowly lower it according to the demand. Therefore, high-ticket would only be sustainable as long as your product is a novelty in the market.
However, there are some disadvantages in choosing this strategy. Depending on the value you attribute to your product, it might be possible that people have no interest in purchasing it. So, it’s of extreme importance to align the price to consumers expectations.
A low-ticket product is the one launched in the market at a lower price than the average price of similar products offered by competitors.
By choosing this strategy, you are able to get the attention of a big part of the market that’s looking for what you are offering. And when people realize how good your product is, they immediately become loyal customers.
By launching your product at low-ticket, it’s possible that you readjust the price gradually whenever necessary.
Making products available at low prices is a great strategy for common products, in a very competitive market. You’ll have the economic advantage and, therefore, can sell larger quantities.
However, if the price is extremely lower than your competitor’s, you may come across shady. Some buyers may depreciate your product and think something is wrong with it.
When to use each strategy
Both high-ticket and low-ticket are great strategies when pricing products, therefore, you just need to choose the one you’ll use according to the purpose of each product.
If your goal is to enter a market niche that is more competitive, with a product that is easy to find, low-ticket helps you quickly capture consumers who wish for quality products at low prices.
However, if you intend to create an innovative product that isn’t found all that easily, high-ticket makes for better profit margins, even if the initial sales doesn’t sell as much.
The most important thing when you’re calculating the price to attribute to your products is knowing that you need to price them in such a way that they are always profitable for who create or market your products.
From all the variables you come across from the creation to the sale of a product, the price is the most flexible one. This means that regardless of the strategy you end up choosing, pricing can be changed whenever you think it is necessary.
Always have as parameter an essential factor: the price you set must be high enough to generate profits for who creates it, but it can’t be as high as to discourage the purchase. And it must be low enough to attract buyers, but not as low as to make people think that your product isn’t good enough.
How do you know if you’ve chosen a good strategy?
As you’ve already noticed, setting a strategy to price products isn’t always the same. But in order to know if you need to change the price, you need to measure the payout of your product.
A good marketing strategy is the one that is able to measure everything you’ve done and, from the results, improve your techniques to improve what you’ve been doing.
One of the most important metrics associated with marketing is ROI (Return on Investment). It’s very important to know if the sales of your product have brought any return after all the investment you made to create it.
Putting it simply, ROI is the metric that shows how much you’ve earned or every dollar you’ve invested in your product.
So, if your ROI is high, it means that you’re having a good return. And that can indicate that your pricing strategy was good.
Knowing how to price products is an important strategy for people who wish to be entrepreneurs in the digital marketing. So, whenever you’ll fix prices for your products, do it attentively and always have in mind what you need to accomplish.
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