Creating a new product for your business is always one of the more satisfying elements of being an entrepreneur. As a small business owner you can sit down and brainstorm a new and exciting idea, spend the time creating this product exactly how you want it, and then share it with the world. What could be better?
The main hurdle which some of us fall under when creating a new product is deciding on the price and the value of the product. That’s why today we are going to take a look at how you can price a product from knowing your MSRP vs. MAP to the labour costs involved and more.
Know the Market
When you are looking into selling a new product in the market you need to make sure that you do your research for it. It is incredibly important to you to know the market you are delving into and this will include you spending some time researching similar products to yours and what kind of prices people are setting for it. Take the time and the effort to really nail down the market so that you are able to produce the most accurate price for your audience.
The next thing you have to consider if you want to price a product effectively is the cost of the product to make. When you are in the development stages of your product it is always a good idea for you to think about ways to reduce the cost of making your product. This can be done by using cheaper materials and even exporting the manufacturing to a cheap country such as China. When you do make your product in the end make sure that you think of the cost you have incurred and ensure that you adjust a price to make a profit.
Speaking of profits, it is so crucial for you when you make a product that you have one eye on the prize. When creating anything for your business you will want to think about what products you can make and how much profit you want to make. There are no rules for pricing a product and this is something you need to remember. If you want to charge a large sum for a product, you can, but you need to also be realistic.
Think Labour Cost
One of the biggest costs you will have to pay for a product to be made is the labour costs. There are people who develop, source materials, build the product, design packaging, pack the products and quality test them. That’s a lot of people doing a lot of different jobs which culminate in this end result. Make sure to set a price which reflects the work put into it.
Use Your Gut
At the end of the day there is no right or wrong when creating a product and a price. It is up to you to make sure that you use your gut instinct and come up with a price which works for you and your business.