How To Price Your Products For Profit
How To Price Your Products For Profit
Pricing your products is one of the most important decisions you’ll make in your business. These decisions affect how much money flows in and out of your business each month when you can hire help (if needed), and directly affects the bottom line of your company–– aka how much profit you take home each month. Today we’re going to talk about how to price your products, and how to work through any insecurities you might be feeling about this topic.
Before we dive in, I want to make one thing very clear. The price you start with isn’t set in stone. It can (and will) evolve as you make changes in your business like–– the quality of your products, the customer service you provide, the shipping options, etc. Pricing touches each of these factors and should be considered each time you “level up” an area of your business.
For another look at pricing for wholesale read through this article!
While there is a multitude of strategies around pricing, we’re going to focus on the value-based pricing model. This method requires you to look outward when creating your pricing strategy. When thinking about how to price your products for profit, you include customer perceived value, along with the traditional cost of goods, and industry standards. This looks something like this:
Finding the industry-standard price through research
Figuring your cost of goods
Including perceived value (what makes your business unique/your story)
When figuring your cost of goods, you’ll want to keep the following in mind:
Production time (how long it takes you to make your product)
Packaging (boring brown boxes don’t add value)
Promotional materials (ex: Facebook Ads)
Shipping costs (if you’re going to offer free shipping)
When doing your industry-standard research, you’ll want to look at your competitors–– both large and small to determine what’s included in their price. Do they offer 24/7 customer service? Do they offer an affiliate program to give their customers products or money back if they refer their friends and family? Each of these things affects a value-based pricing model and should be considered when doing research. Value-based pricing is not a typical “straight line” model.
Since it’s not a straight-line model, insecurities are bound to pop up. The good news is that if you arm yourself with an adequate amount of data (like surveying what’s important to your customers), you’ll be able to confidently price your products and “go to market”.
Want to walk through pricing in a more in-depth way? Take my School for Wholesale Pricing course for only $97 today! You will get immediate access to 5 modules that will give you the tools to price your products for profit at wholesale!