![]() When costs change, your prices will have to change in order to stay competitive and keep making a profit. Software and services for things like accounting, marketing, and legal Overhead costs (rent, insurance, utilities, taxes, etc.) ![]() When calculating costs, make sure you include:Įmployee wages (that includes what you pay yourself!) If your prices aren't higher than your costs, you'll be out of business before you even get your company off the ground. I know I just said cost wasn't the only factor to consider, but it is the most important one to start with. But unfortunately, it's not that simple: there are a lot of factors you'll need to consider in order to determine the best pricing strategy for you. You likely know off the bat that you'll need to consider your own business costs and competitor prices so that you can find a price that earns a profit but isn't so high that it drives potential customers to other businesses with better deals. Factors to consider when pricing a product But you'll spend a lot less time and money starting with a pricing analysis than you will taking a complete shot in the dark. Sure, you could just trial-and-error a bunch of prices until you find the price that maximizes profit without deterring potential customers-and there will probably still be some of that even after you choose a pricing strategy for your business. The goal is to set a price that will entice customers to buy, but that isn't so low that you're not making a profit. The pricing page on my website What is a pricing strategy?Ī pricing strategy is a plan for setting the best price for your products or services.
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