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6 Factors To Consider When Deciding On A Price

Believe it or not, it’s just as easy to price yourself out of the market by going too low as it is by going too high.

The reason for this is that many people are heavily influenced by “perceived value”. If a product is priced high, they tend to expect that product to be of high quality.

Conversely, a very inexpensive product is often expected to be low quality and many people will avoid it, assuming it isn’t worth the money. Same thing happens to free products.

When next you want to price a product, follow these simple guidelines to arrive at the best price for your product:

1. Borrow from the pricing currently in use by your competitors, if you have any – You don’t want to stray too much from the market standard price unless your product is significantly different.

2. You must consider the income level of your average customer – Obviously you must price reasonably enough that people who want to purchase your product would be able to do so.

3. The quality of your product – Be objective and compare your product to that of your competitors’ products. If yours is significantly better, you may be able to charge more. If not, you may have to charge less.

4. Your reputation vs your competitors’ – If you have a much better reputation or are much more widely known than the competition, you should be able to price higher. Otherwise, you’ll probably have to charge a bit less unless your product is significantly different.

5.  The prestige of your product – If your product is a fairly popular brand name, you might have a pricing advantage. People will pay almost over N100,000 for an iphone even though they could get a similar product from TECNO for half the price because they want the prestige of the Apple brand.

6. Desperation of your target market – People will pay more if your product is something they are absolutely desperate for, such as a cure for something painful or a way to get free start up capital for their business.