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.
But also other pricing factors must be taken into consideration before choosing the optimal sales price.
Your target group conditions also influence the pricing:
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.
If you deliver something extra you can often charge extra for your product.
Depending on the competitive situation in your market you must at least investigate the following:
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 neighbor 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.
It is easier to ask forgiveness than it is to get permission.
– Grace Hopper, American computer scientist