Business Price

How To Set the Right Price For a Product

Introduction

After finishing with the production process the next step is usually determining what the rates for your product are. If you are probably wondering the way to set the right price for that same product, then this is the right place for you to be. The conflict of decision comes in mainly when you have to harmonize your needs with the expectations of your potential consumers. Sometimes it is not the question of the right price that is the main concern, it may be that you do not know the long term implication of the price you have set and as a result you are not happy with it. Today though, you may not have to continue living in oblivion or dissatisfaction about your price because the long lasting remedy is here.

Step 1

It is important to first get to know the general price level of the product you have dealt with. The general price level will then assist you to gauge yourself and set the right price. The general price level is the price below which a producer or retailer cannot go below lest they risk to make losses. When you know this price then it is easier to determine the right price because even in the event of haggling you will not go under the reserve price.

Step 2

Long term pricing falls easily between penetration and skimming. You can choose to have different pricing points and make offers at different points. You could also make discrimination prices for your product or service where different customers get priced differently in distinguished criteria. For instance, for an event you can put different arenas and price differently for them, each arena with its right price. Your product or service will not in turn will not discriminate your customers according to desire but according to financial ability. You will have catered for everyone then.

Step 3

You know business is not a smooth highway, don’t you? Now get moving. Move around and make enquiries of prices from your competitors around you. Get to know the highest price offered and the lowest likewise. It is not that easy to just make up your own price and call it the right price, when you haven’t considered the prices offered by your competitors. You must be able to compete favorably against your competitors and even though you trust your product or service you must first keep on a level same or close t the rest.

Step 4

Keep into consideration both the fixed and unfixed costs involved in the production process of your product or service. While fixed costs remain constant regardless of the sales or production, the variable costs rise with the amount of production and sales. All in all you must be able to get the right price that will enable you make profits.

Step 5

So do not think of getting your right price as a nightmare, it becomes easy only when you have done the few calculation of cost of materials, labor, facilities and all the other things that add up to give the cost of production, when that is neatly done the rest is just a slope you have a minimum price in your head so the making of the right price starts from there.

Conclusion

Knowing the right price for your products is very important. Whenevr you set a correct price you will at least be guaranteed to always have customers on your side. However if you overprice any of yoyr products it may nd badly since you may loose many customers.

Sources and Citations

Price control websites.

By Hannah, published at 02/27/2012
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How To Set the Right Price For a Product. 4 of 5 based on 11 votes.

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