3 Critical Factors That Will Influence The Pricing Of Your Product.

In the world of business, price is one of the 4Ps of marketing. The strategic pricing of your product is such an important part of a business building process that it can never be over emphasized. Why? You might ask. This is because the price of your product can either break or make your business so it should not be handled with kid gloves.

When it comes to the pricing of your product, there are certain factors you must take into consideration. I will be using this article as a medium to reveal to you 7 critical factors that can influence the pricing of your product.

Below are the 3 critical factors that can influence the pricing of your product:

1) The level Of Competition:

Most entrepreneurs fancy the concept of selling their products with a very high margin. This idea might never be a reality due to competition.

When trying to determine the right price for your product, the issue of competition is a factor that must be trashed out effectively. The more intense the competition in your industry is, the more intense your pricing policy and strategy will have to be.

What i am trying to stress here is this; if your competitor is offering the same product with yours but with a lower price, it may affect your business negatively. That is why in a feasibility study or business plan, competitor or opposition analysis is always included.

2) Perceived value of your product:

This is another factor you take into consideration. Your first step is to ask this question "what is the perceived value of my product in the heart of the customer? You must strive to find a good and definite answer to this question before fixing a price for your product.

The reason perceived value is a critical factor is because customers often associate low price with low quality. Meaning, if your product is priced too low, the customers tend to feel the materials used in producing the goods is cheap and so therefore, the product is of low quality.

So before fixing a price for your product, make sure you strike a balance between the price of your product and its perceived value.

3) Product development cost:

This is definitely a factor you cannot run away from. Normally, you can never price your product below its actual cost price, which is determined by the total cost of production and the tax per unit of your product.

If you are a business owner, you should know that newly introduced products usually have a high price. This high introductory price is based on two reasons:

The first reason for the high price is due to lack of competition, since the product is the first of its kind in the market place.

The second reason is this; a high price will enable the manufacturer recover the heavy investments channeled into the research and development of the product.

In conclusion, i will advice you take these factors into consideration before fixing a price for your product.

I believe you have learnt something from this article. Till i come your way again, Good Luck.