The first rule in determining what you should charge, is to first determine what your cost is.
- What is the cost to bring your product the market?
Start by listing all your calculated expenses to launch this product. This will be your Launch Budget. Creating such a budget will help you keep your business on track.
Then determine what type of Pricing Strategy you want to pursue. Here are examples of strategies we use in helping our clients create their price structure.
Profit Based Strategy - driven by the desire to maximize financial performance. With profit as the motive, prices are set to deliver fast return on investment.
Penetration Strategy - To gain market share, great for when you are introducing a new product. In this type of strategy, sellers set prices low enough to encourage customers to buy
Skimming Strategy - This strategy works well for innovative, leading -edge products with strong benefits. This is usually a short term pricing strategy. Your attempting to enter the market with the highest price, and get consumers to buy while its a lucrative market.
Positioning Strategy - Pricing based upon your position in the market
Premium Strategy - This would be used when trying to maintain the prestige of unique products or services, therefore having premium prices for your tightly targeted high end markets
Economy Strategy - This is useful when trying to move inventory quickly. Costs are typically low, or generic.