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Price your product correctly and for the long term with these tips

New product? “Then put it on the market!” Many companies think this way when launching a product and immediately get down to the business of selling. But pricing is an important process that should ideally be carried out calmly and without any rush.

t3n • 25.11.2021 • reading time: 3 Mins

Pricing a product suitably can be a rather complex thing. In particular, young companies and start-ups that want to launch completely new products on the market often have problems finding a happy medium – above all because the brands involved are not well known. The main worry: If the price is too high, the profit margin won’t be sufficient. In this article, you can find valuable tips for getting the right price tag on your product for the long term, and for identifying possible problems and stumbling blocks.

Looking inwards

Orienting things according to your own costs is a simple principle that’s worth following, particularly for newcomers. How high are the manufacturing costs for the product? What are the running costs that have to be covered? Is it going to be a one-off purchase price or a subscription model? Regardless of the answers here, the profit margins can’t be forgotten – you have to keep your company profitable somehow.

Once you’ve answered these questions, you’ll come up relatively quickly with a number that works well for your company. But in most cases, this total is always utopian, because a key matter hasn’t been considered yet: the customers. If the price isn’t accepted, the best calculations in the world won’t be any good to you.

How much would you pay?

Good entrepreneurs are completely convinced by their products, and in most cases they’re right to be. But a critical view can also be of help: Put yourself in your customers’ shoes and cast a sceptical eye on your product. Would you pay so much? Customers are particularly reserved when it comes to start-ups and unknown products because they don’t even know if they like the product. The solution: try to find out how many of your target group would pay for that product and include your desired price in the calculation.

Here a good customer service is essential for the ongoing evaluation of your product: in order to find out what people think of your products, you need established and simple communication channels.

What does the competition say?

It’s not only when crossing the street that looking right and left is important. What are the competition’s prices like? These figures could be a great way to help orient yourself better with regard to your own prices. On top of that, every start-up’s favourite word now comes into play: the USP (unique selling point). Knowing exactly how your products differ from those of other providers can help you to better estimate your end price. In a nutshell: If your product is cheap to manufacture, then you can beat your competitors’ prices. If your product has a certain advantage over the others, you can also price it more strongly.

Prices are flexible

With all of the tips and watchwords, one key thing needs to be considered, however: The price should never be completely set in stone! The market situation or the company’s position can often change, so it’s always worth checking the prices of products carefully and calmly. Special situations like discount campaigns can attract customers to buy if the product is actually priced high. Especially with online shops, the question of shipment is also important for setting prices – depending on whether the customer is to bear the costs of the shipment or if you would rather offer free delivery, the shipment costs has to be included in the price.

It can get complicated very quickly

If different payment models and an expansion abroad come on top of this, things can get complicated very quickly. If you send your product to another country, you need a tax ID for this location and have to pay the local tax rate. Making calculations required to keep the price constant is a considerable task. If the product is not a tactile product, but a subscription or a SaaS solution, things can get even more complicated. The more things you include in your pricing, the more suitable the price will be in the end – but at some point, you’re going to get lost in the forest of numbers if your expertise in this area isn’t good enough.

If you’re looking for help here, you’ve come to the right place.

nexnet automates this process and manages the creation of the invoices and the billing. In addition, user data are analysed in order to be able to draw the ideal conclusions for your business. Find out about now about the services offered by nexnet.