Let Your Price Sell Your Products

Knowing the right price point for your products or services is essential in generating a high conversion rate and the most profit. The right price tag can attract a whole new set of customers. 

There are several things that need to be factored in when test pricing a product or a service:

1.       Product value. Rule of thumb: make sure that the selling price of your product is greater than what it costs you to manufacture, package and market it. 

• Pricing low. Pricing low can stifle your growth. Revenues may not be enough to sustain your business. Plus this means that you need to sell more, more and more in order to profit. In some cases, there may not be enough buyers in your target audience to reach that number of sales where you become profitable
  
   Pricing low is really hard to recover from. When the time comes that you decide to increase your price, whether or not the increase is justified, it can be hard to convince your customers to buy the same products at a much higher price. 

• Overpricing. On the flip side, pricing your products too much can be just as detrimental as pricing low since your target market will be forced to look at your competitors products to compare prices. You may lose customers in the process. 
  
  Pricing beyond the amount customers are willing to pay can decrease your sales and your revenue.  So it’s a much better idea to price your product appropriately right from the start. 

2.       Perceived value. One customer may value a product differently from another customer, especially if your products have many features/benefits. However, the overall perceived value of your products can be impacted by the price tag you attach to it. 

Customers use prices to benchmark the quality of products. If you set your prices too low, customers may think that they are not of high quality, defective or not in demand.  Don’t slash the price too much as this may cause your products to become undesirable to your target market.

3.       Numbers in prices. Some numbers prove to be more appealing than others when it comes to the prices of products. You can test how your own target market reacts with the numbers in prices. For example, you can have test prices ending in 5, 7 or 9. 

 Final Thoughts

Setting the right price for your products or services can help you maximize your profit while keeping your customers satisfied. Effective pricing can also help you avoid serious financial problems caused by pricing products too low or too high – if you charge too low you may not be able to keep your business afloat, but if you overprice you may scare away potential customers.