The Art of Setting Your Price

The Art of Setting Your Price

When it comes to selling services or products, it takes more than just a good idea and proper execution. Good pricing is just as essential as advertising, quality materials, and delivery execution. Without the right price point, you drive away customers and lose money on running your business. There’s a tried and true way to set a fair price for your items, whether you’re selling a tangible product or a service with no physical component.

It’s tempting to check out the prices set by your competitors and aim to undercut them by a small percentage. However, this is the wrong way to go about pricing because you can’t be sure what kind of costs your competitors need to cover. Start by sitting down and recording every single cost associated with the creation and sale of your products. From website hosting to packaging prices, you can’t overlook a single cost or you’ll lose your profit margin very quickly. Each item or service you sell needs to contribute towards your warehouse rent, power bills, and other routine business expenses. Add a healthy profit margin of at least 50% to the top of those costs to make sure you’ve got money to grow with—and that you can afford to offer sales and deals on occasion.

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