It’s important to take a lot of things into consideration as you price each product you create. In fact, even as you create your product plans you should know what you’re charging, so you know how much is okay to invest in the creation of the product.
Here are some questions to think about to help you decide on how to price your product.
Who Is Your Customer?
The most important thing to bear in mind is exactly who your customer is. How much money do they have to purchase your product? If your product is an extra purchase for them, how much extra do they have to spend? If your product is a necessity, how much does this person usually spend on this needed item? That information will let you know about the quality you can create based on how much they’re going to be willing to pay.
What Benefits Does Your Product Give Them?
This is another important consideration, because if the benefits are worth a lot to your customer, you can charge a lot. If it’s a tiny benefit then your price will be low. It all depends on what you’re creating, who for, and what it does.
How Much Extra Value Does Your Product Provide?
On top of the normal and obvious value that your product provides, what are the intangible benefits of this product? For example, does joining your club for a particular fee give them access to your personal time? If so, that’s a high-cost item.
How Much Are Your Competitors Charging?
While you shouldn’t price to compete with competitors solely, it’s a good indicator of what your audience might be willing to pay. If someone has been in business for a long time, selling something like yours for a long time at a particular price, you can choose to price around that value as long as you aren’t low-balling yourself.
What Type of Choice Can You Give Your Customer?
If you can offer more than one version, you can actually offer a high and low choice at once. Often, giving your audience a choice can help you with pricing decisions by letting the consumer choose. Offer different versions so that you can give a high and low price.
Will the Price Enable Potential Promotions?
Remember if you price too low, your only choice when running a sale or promotion is to offer the product for free. So, consider whether or not you’ll want to run a lower price promotion in the future. If so, price higher.
Is This an Entry or Higher Level Product?
If you have other products than this one, try to figure out where it fits into your product funnel and price it accordingly. Lower level products should be priced lower than your higher level products.
Is This Product Part of a Continuity Program?
Often continuity programs can be priced lower on a monthly basis than you would charge if it was all at once. This is an excellent way to give people two prices. Monthly or a one-time higher price that is good for life. This strategy is a great way to earn more today.
When you price your products, your first thought should always be about the consumer, and the benefits and the value your products provide to them. Your last thought should be about how much it cost you to make, or what your competition is charging. Although all these things do play into the decision to price high or low, they should not be your first consideration.