READ THIS BEFORE YOU PUT THAT PRICE TAG TO YOUR PRODUCT/SERVICE

Many times, we are very skeptical when it comes to putting a price to our products and services.

We don’t know if others would appreciate it, or devalue it or we are under pricing that particular product or service, so most times people charge nothing or something less to test the waters, which is good but I decided to help you guys. After all I’m a growth and marketing strategist.

When it comes to fixing a price to goods and services, there are certain things to consider before you put a price to it.

Gentlemen, shall we? (In Elijah Mikealson’s voice)

1. The first thing to consider is the cost of making that product, what did it cost you to get the raw materials, what did it cost you to do that course from scratch, now cost isn’t about the materials, it could be about the toil it took you, your sweat (figuratively) and the investment you invested into yourself or the people who made that course or service happen.

2. You consider the pain point that the service is solving, for instance a doctor can charge high, why?

He has already invested in himself, with knowledge and hours of study to give a precise treatment to a patient knowing fully well that one wrong move can cost the patient his or her life.

Some consultants/brand specialist/marketing expert can charge high, why? Because they know that after you encounter them, your business can never remain at the same level it was.

One must consider the pain that your product is solving, how safe or comfortable is the client without your product or service in their lives.

3. One has to check the competition, how many competitors are there in that same industry, a niche that has many competitors would have a lesser price because there is ease to switch brand patronage, also you have to check if your price is higher or lower compared to that of your competitors.

I’m not saying that one must peg a price in relation to other competitors, so if competitor A and competitor B both have X price, it isn’t a license to have yours pegged at X too, there could be some adjustments or improvements to your product or service, I’ll talk about this also.

4. One also has to look at the improvement and adjustment of that product compared to the existing competition.

So let’s say that your competitor’s product is a powdered milk, and it is priced at X but yours is a powdered milk with a flavour of banana, it should not be pegged at the same price because there was an improvement to previous products.

5. Next factor to look out for is if that product has an alternative,

An alternative is different from competition because it can easily be substituted with that product.

One time when bread became expensive because of the increase of flour, people resolved to using biscuits for a while, biscuits is an alternative to bread, same flour but quite cheaper compared to bread as at then.

Sugar A and Sugar B are competitive products, but an alternative can be honey, saccharine, sweeteners etc

So it is wise to check for the price of alternative products before you fix a price to that product.

6. One should check the economic factors of that region, what is the cost of living of that area before you fix that price.

How much does your target audience make as his or her income monthly and how frequently do they purchase that product.

Network providers can effortlessly afford to peg their product at a certain price because of the way people purchase airtime, it is said that over a million Nigerians recharge their phones daily, well I could be wrong with my statistics as at today.

So one is making a course for students and you’re charging them like they are employed, yes I know there are exceptions to this and some students make more money than some employed staff but should we generalise this, is this the average income of a student? I’ll let you be the judge.

7. One another factor that determines the price to fix to a product is the law of demand and supply, although this is mostly considered when one is creating a tangible product that can be seen.

When a product is in high demand, it’s best to increase the price to build a balance between the supply rate and the buying rate.

One can notice this in cinemas, how movies in high demand are given a high rate so that one won’t see a large crowd in the cinema hall much more than they can handle.

8. Lastly one has to bear in mind the brand equity of the person or organization. Different phone companies can create a phone, same function, same features but they can’t sell it at the same price because of the equity and leverage that their brand has.

Some brands have over time been consistent with delivering value that they have gained the loyalty of most customers that even if they create the same product with same features, they can take it as high as they want and people would still purchase because people buy emotionally and justify with logic.

This is why most start ups can choose to charge less so that they can win the heart of a few loyalists and then from there build a community.

Imagine Obama writing a book and giving it out for free, even if he wanted to, you would prefer to buy it because of the personal brand that he been able to build over the years

Hope you learnt something new.

Also this was inspired by Peace Itimi’s video content on the ‘pschology of pricing’, you should probably check her out😊

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