Our answer is actually quite simple. You set your pricing through a process of calculating your costs, estimating the benefits to consumers and comparing your products, services, and prices to others that are similar.
Set your pricing by examining how much it costs you to produce the product or service and add a fair mark up for profitability. The pricing strategy you develop will answer the following questions:
· What is the cost of your product or service? Make sure you include all your fixed and variable costs when you’re calculating this; the cost of labor and materials are obvious, but you may also need to include freight costs, administrative costs, and/or selling costs, for example.
· What kind of ROI (Return On Investment) are you expecting with this pricing strategy, and within what time frame?
As always, we are happy to answer any questions you may have or if you would like more information.
What about you? What strategies work for your business?