The price of your product is almost always a driver of purchasing behavior. And with just a 1% drop in price producing up to an 11% increase in profits, it’s clear that finding that perfect number will be worthwhile. Price your product too low and you may cut into your profit margins or send a message that your product’s quality is lacking. Price it too high, however, and you lose potential customers and purchases. That is why determining your product’s perfect price point is so critical.
One of the starting points to determine your product’s price point is to conduct market research. After quality market research, you should have a solid idea of where your product fits in the current market and which products represent its biggest competition. After determining where your product fits in the market, you will have to determine the cost to produce your product to find your suggest retail price. This price minus your costs is your profit margin. Typically, your margin should be 30% or above.
For more information on factors to keep in mind in finding that perfect price point and the difference in pricing when dealing with brick-and-mortar stores and the internet, check out the resource below.