The million dollar question for so many of us makers and creatives is: what is the right price for your product?
What Is The "Right Price" For My Products
Well, the answer is really pretty simple!
The “right price” is whatever your target market is willing to pay once they know the unique value your product offers!
Pricing is one of the most critical decisions in the product development process, and it’s essential to do your research and set the right price from the get-go.
Here are some of the things you need to consider EARLY so you hit on the right price for your work.
Cost vs. Value
When thinking about pricing your product, it’s important to understand the difference between cost and value. Cost means how much is needed to produce and deliver the product. Value is the perceived benefit of the product to the customer. Prices are based on value. The goal of your marketing is to communicate this value to your audience.
Research the Market
A good way to develop pricing ideas is to examine the market and see what other companies are charging for similar products. This gives you an idea of what people are willing to pay and sets a standard for pricing. You can set your price just under the competition’s to undercut them, or position your product as the luxury version and set the price higher.
Know Your Target Market
Get to know your audience well. Create a customer profile based on data obtained through research on your potential customers. Part of this profile includes their buying behaviours and attitudes. This will tell you how much they’re willing to spend. This research will also reveal which problems your audience is suffering from to position your product as the solution to these problems.
Your price should at least cover the costs of making and delivering the product. One way to start with pricing is to figure out production costs and then decide on the margin you want to receive per unit. Combined with your marketing research on customers and competition, you can find the right price that will make your offering both profitable and a good deal for your customers. Keep in mind the fixed costs and the variable costs that you can adjust if you can have some flexibility.
Test the Market
There are several ways to test the market with your pricing. You can hold focus groups where you present a few select audience members with a sample product and get their opinions on how much they’d pay for it. You can also offer a soft launch to see how much you sell at your chosen price.
Offer Flexible Pricing
For creative service providers, one way to solve the pricing problem is to offer your customer several pricing options. This is a win-win because it gives them more choices and helps you sell more.
You can create different levels, from Basic to Deluxe. The lower levels have fewer features and a lower price tag, while the higher levels offer more at a higher price. Another flexible pricing option is to offer bundles of products together. The bundle is priced lower than if the customer bought each product alone.
Start Considering Price Early
Don’t wait until the last minute to start thinking about the price. In your product development’s early research phase, please start thinking about how you will price it and research your customers’ market. It’s a crucial decision that shouldn’t be taken lightly.
Once you’ve determined what your prices should be, stick to them! It’s not always easy to talk about money so check out our post “Say It With Confidence; How to Discuss Your Pricing Like a Pro“.
Thanks for dropping by Handmade Life. We look forward to seeing you again soon.
Do you want to learn more about setting the right price for your products? Watch out for our course, Pricing for Profit: A Maker Biz Boss Bootcamp, which teaches you the A to Z of pricing your product the right way and helps you achieve your business goals. Coming soon to the Handmade Life Academy!