PRICE QUESTION: WHAT IS THE COST OF THE PRODUCT AND HOW TO REGULATE?
WANT TO BRING NEW PRODUCTS TO MARKET, BUT DON’T KNOW HIS PRICES? HOW DO I MAKE SURE THAT THE COST DOESN’T SCARE OFF CUSTOMERS OR SHOCK COMPETITORS?
We will tell you how to start pricing and how not to dump at every opportunity.
Svetlana sterkhova, a business coach at Moscow Business School, PhD in Economics, associate Professor, and marketing consultant, helped prepare the article.
WE CAN’T STAND THE PRICE…
We can’t stand the price…
There is no single recipe for determining the cost. Everything depends on the goals that the company sets for itself, as well as on the cost of goods and the size of the enterprise’s profit.
How do I choose the right price? There are three main approaches:
1. Costly. It is based on all your production and sales costs.
2. Focused on the potential consumer. The demand-driven approach: what price customers are willing to buy a product for, taking into account the useful properties of your product.
3. Focused on competitors ‘ prices. In this case, pay attention to the quality of their products. By comparing, you can determine whether your product is superior to competitors ‘ analogues, is at the same level, or is inferior. Your price will depend on it.
ONLY WITHOUT THE EXTREMES
Only without the extremes
If you have defined your goals and strategies, start looking for a middle ground.
Analyze the market situation.
Find out who is in the lead and who is new. Study the demand for your product
See what your competitors offer.
So, you have identified all the advantages of your product and seen what the market is rich in. It remains to answer the question: high or low price?
THE CHARACTERISTICS OF HIGH PRICE LOW PRICE
The lack of
Remember that only companies with a unique offer or a well-promoted brand can afford the highest price on the market.
DON’T RUSH IT
Don’t rush it
If you put a product on the market, but it is not yet prestigious in the eyes of customers, we advise you not to rush to increase the cost. Customers will not understand such a sharp jump. You need to start working for promotion gradually. It may take several years before you reach a certain price level.
If your product is already a success and you have a well-promoted brand, know that the buyer is willing to pay for the quality and status. So it’s time to think about a policy of smooth price growth.
WE WILL DO WITHOUT DUMPING
We will do without dumping
Dumping is an artificial reduction in the price of a product or service. Please note that dumping will only work in two cases:
1. If your company occupies a leading position in the market and it has a “safety cushion” in the form of additional business.
2. If you have created a unique production technology that allows you to minimize the company’s costs.
And remember: when you lower the price, there is always someone who will reduce it by half, or even three times. And the most negative phenomenon that can only be on the market is a price war. Never get involved in it.
The best thing you can do in a dumping situation is to find a certain niche in the market or a group of loyal customers and offer them special terms of purchase.
GIVE A DISCOUNT!
Give a discount!
In the hope of quickly attracting consumers to their products, some businesses practice spontaneous distribution of discounts. Customers may be put off by this. After all, the first question they will have is: “do you have a bad product?”
If you want to win the trust of customers, then come up with an excuse to give a discount. For example: “special price for women”, “giving bonuses to birthday parties”, etc.
Do not forget that by lowering the price of a product, you attract so-called “discount catchers”. They don’t care who they buy from, and they are unlikely to become your regular customers.
Is it important for you to attract regular customers? Offer them a gift for their purchase or a free product sample. Whatever approach to pricing you choose, remember that the main thing on the way to success is simple and clear goals and the most clear strategies!