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A startup business must decide the pricing for his or her product or service, but what is the best price?
Before your product or service reaches the customer, a number of cost accumulating
activities have taken place. These have to be calculated and taken into account.
- Read
about Estimating Cost
But also other pricing factors must be taken into consideration before choosing the optimal sales price.
Pricing: Demand from target group
Your target group conditions also influence the pricing:
- What are the customer’s requirements, buying motives, and expendable
capital?
- Season, trend, fashion
- The customer’s price expectations – psychological price, corporate
image, price and quality, etc
Put yourself in the customer’s place, and then fix the price. During periods
of low consumer expenditure, it may matter whether your product/service is a
necessity or a luxury item.
Market Structure
Depending on the competitive situation in your market you must at least
investigate the following:
- The general price level of the product/service
- Are the competitors campaigning on price?
- Which other competitive parameters apply?
Inter-changeability
If price is the most important parameter, then you must also consider if other
products/services are inter-changeable with yours. If you sell takeaway spring
rolls and your neighbour sell hamburgers. then these products are
inter-changeable. The customer’s hunger will be satisfied from both products.
The higher the inter-changeability, the more the customer gains from purchasing
the cheapest product/service. - Go to next
business issue: Pricing - Expences in focus
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| Mogens Thomsen, Scandinavia |
28-11-2009 |
An experienced web shop guru from Denmark, Martin Thorborg, has written an e-book called E-pusher, which gives very good sales advise to web shop owners. He sells this PDF-document for 300 US dollars per copy and the sale is app. 1.500 copies. It is a quite good income for a PDF document, as he says.
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