Are you ready to open your business? I imagine that you have worked hard and you have everything organized, but there is still one small detail missing…. which is not so small. Put a price on your products!
How to do it? What do I have to consider when setting a price? Am I setting the correct price? There are many questions and we want to help you solve them before a tremendous headache takes over your mind.
To begin with, it is important to keep in mind that prices are key for your business to work, be profitable and consolidate over time. Prices create competition and are a critical element in attracting customers. They have a direct impact on the financial health of your business and are what allow your numbers to be blue at the end of the month.
Small changes in the prices of your products or services can generate a large percentage of increase or decrease in the profits of your SME, so it is key to give it a spin before fixing them.
What factors to take into account to choose the price?
Before defining which pricing strategy to use, it is important to be clear about who your target customer is, and the prices of the competition, and understand the relationship between perception of quality, positioning, and price.
There is no single strategy that works for all markets, so it is important to understand how your business industry works before making a decision. Here are some possible strategies:
1. Set your prices according to the costs of your products or services
- Determine all the costs of your product, taking into account materials, labor, indirect costs, etc.
- Set the price based on these costs.
- Manage to convince your buyers that the price of your product or service is fair.
2. Set your prices according to the value of your products or services
- Assess the needs and perceptions of your typical customer. It is key to know what is most important to them.
- Set a target price to be able to match the value that your customers perceive of your products or services, that is, determine how much value what you sell could have for your customers and put yourself in their shoes, think how much you would be willing to pay if you were they.
- Determine what costs may be incurred.
- Create or perfect your product or service, so that it meets the desired value at the target price you have determined.
3. Set your prices according to the prices of your competition
- Do an analysis of how much your competitors are charging for similar services or products.
- Define how you want to position yourself with respect to them. In general, a higher price will be perceived as higher quality and a lower price as lower quality. Consumers are interested in obtaining the highest value (best quality at the lowest cost), and not just the lowest cost.
- Make sure that the price is consistent with the quality of your product or service, and that it is higher than your costs.
What is this? Simple, it consists of making a certain discount on a group of products, so that it is attractive to your customers.
It is related to the seasons or specific situations in which it is necessary for your prices to adapt. It is important to always keep it in mind and know how to use it. The flexibility and the possibility of being able to change them quickly will allow you to use the adjustments in your favor.
It is important that the program you use in your store allows you to quickly make adjustments and manage multiple price lists, such as the Moose Consulting sales software.
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Some examples of price adjustments:
- Seasonal discounts: these are seasonal sales or offers associated with an event (Mother’s Day, Cyberday, Christmas, etc.).
- Seasonal increases: In some situations of increased demand, you can increase your prices to improve your margin. Be careful not to generate mistrust.
- Quantity discounts: Give rewards to your customers because they buy a large volume of merchandise or a certain number of times per month. In addition to helping you sell faster, making your customer experience seamless will go a long way in strengthening your relationship with your customers.
We wish you every success with the price selection! If you are interested in selling more and better, we invite you to try Moose Consulting for free for 30 days.
Moose Consulting offers you an online sales system that will allow you to improve the administration of your company by optimizing processes related to sales and stock control, in addition to selling through various channels, all from the same platform.
We invite you to learn more about Moose Consulting or keep checking out our blog for more business management, e-commerce, and sales tips.