How do I price my product/service?

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This is a big question.

There are so many ways to work out how to price your product.

So let’s cover off some of the basics.

The foundation of any products pricing is the assumption you are trying to make a profit. So it seems obvious but you have to price it for more than it costs you to make, promote, deliver etc. Now even this is tricky, since early on in your business you may not know how much it is going to cost you to market it, or how much you’ll have to spend to get and keep each customer.
It isn’t as simple as say just doubling your manufacturing cost, you really have to work out your business model, and do some forecasts on costs of production, marketing, sales, admin, storage etc etc.

One recommendation we would make is look at being a premium supplier in the market – especially if you are a small business or niche business competing against bigger businesses. The point here is it is almost impossible for a small business to be the cheapest supplier. Big business has the ability to buy in bulk, produce in volume etc etc.

Small businesses are almost always better off thinking low volume, high price in products and services.

It is also very hard to increase price once you’ve set a benchmark, so take time to consider your pricing model very carefully, and err on the high side up front.

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