The past year and a half have seen all sorts of changes spread across the consumer market. More and more people are setting up their own businesses due to loss of work through the coronavirus and Covid-19 pandemic. Whether that’s through unemployment, redundancy, reduced hours or reduced salary, it has seen the significant rise of small businesses operating online. Of course, if you are a part of this small business trend, one major factor in whether your business will be a success or not is whether your items are priced correctly or not. You can have the best products in the world, but if you’re undercharging, you won’t make any profit from them, and if you’re overcharging, you won’t sell them. So, how can you go about pricing your products correctly the first time around? Here are some suggestions to help you along the way!
Conduct Market Research
Before you start getting round sticker printing and price tag printing on the go, you’re going to need to determine what the market will happily pay for your product. This insight can be gained through market research. Put simply, market research is any research you conduct into consumers and their behaviour. You can learn a whole lot about what people want and what they are willing to pay for the resultant product through a series of surveys, questionnaires, focus groups and seminars. Generally speaking, small businesses will outsource this work to third party companies specialising in market research. This tends to be the most cost effective and time effective method.
Of course, you’re going to have to make sure that your price is competitive. If your product is the only one of its kind on the market, you can price it however you like. But pretty soon, competitors will come along with similar products and you’re going to have to make sure that your prices are similarly aligned to ensure that people consider your products rather than necessarily automatically opting for the competitor product. Now, competitive pricing is often a point of contention amongst businesses. Why? Well, if one company significantly undercuts the prices of another, they can easily steal the other’s customers from beneath their feet. However, at the same time, it does negatively impact the perceived value of the goods in the customers’ eyes and can massively reduce the business’ profit margins. Coming up with a competitive pricing strategy will require you to look into competitor products, their relative quality and value for money and what you deem would be a reasonable price to set for your own products.
Proper pricing really is an essential step in any business’ success – especially a newly emerging business that’s just getting its foot in the door. So, hopefully, some of the above information has helped to shed some light on the pricing process and the best steps for you to take in regards to pricing going forward. Each piece of information could come in extremely useful, so keep it in the back of your mind at all times!