To find the right price for your product or service

"How should I set my prices?" is usually the first question, once the business idea, the product is ready. The pricing is a tough nut for the founder. Optimally, it would be the price set so that the customer is willing to pay him, and my gain is maximum. Only - darn again - where is located the "best price"?

The optimal price the most profitable

Unfortunately, the optimal price can not be easily and accurately calculate a formula. In principle, the price can only try out: Start with a price. Then set him up and see if the gain is greater (even if you sell less, the profit may rise because your price is indeed higher now). If the profit, you lower the price, look at your bottom line. Sell ​​more now? Sinks of profit? No, then lower the price on .... I think you get the idea. If your income is highest, you have the optimal price found. Unfortunately this approach is somewhat theoretical. It may take a long time and your customers will certainly not feel like a constant up and down your price. Therefore it would be good to start already with a best possible price. That's how it works:

What factors you need to consider when pricing

1. factor: costs (fixed & variable)

Your price must naturally be above your costs. If you sell at your own cost, then you burn your money. You have to distinguish so-called "fixed" costs and "variable" costs. Fixed costs are costs that you definitely, eg rent, telephone, insurance, etc. Variable costs only arise directly in the production of your product or service. These are for example, your labor, materials, etc. If you take into account all costs, then you can calculate how much you need to sell and at what price, so you can live on.

2. factor: competition

Of course, every customer compares offers from various providers. If you offer the same as your competition, it will be difficult to get paid higher prices. If your product or service is "better", you can also ask for a higher price. But even here the customer will compare whether the price difference is justified for him. You may add your price so do not completely independent from your competition set (but if you really really have a unique product, heartfelt congratulations to Bonanza!).

3. Factor: Benefits

A customer buys not just a product, but they are buying a "benefit", which this product has for him. I buy not just a watch, so I have a watch, but because I always want to know what time it is, dive with my waterproof watch or want to show off my Rolex. The greater the value for the customer, the more it will also pay for it. If you really can give me some advice on how I can save 10,000 EURO a year, I have absolutely no problem with that, you pay EURO for a single Council 5000th Everyone wants to feel more get for his money than he paid.

4. Factor: Strategy

"Strategy" as a factor in pricing means that you use the price to achieve a certain goal. A known price strategy is the "price dumping". It tries a provider with prices that are below cost, to push the competition out of the market. Price dumping is likely to make little sense for founders. But a good strategy, it may be, with a low introductory offer at all to come to the first customers and orders. On the one hand you can as the first references earn (more in the article " How can I win the first customer? " ) And, secondly, to build a customer relationship that can be profitable by subsequent purchases.

When it comes to price real money - test your price with the real money your customers

For pricing large enterprises often employ market research institutes. Potential customers are asked: How much would you be willing to pay for this product? - This is the same as when you ask people on the street, whether you would be willing to get involved in a good cause. Of course, everyone WOULD ready, but really MAKE it is behind any more. In short, they do not want to know what your customers are willing to pay WOULD but for what price your customers really buy button. Only the price someone is actually PAID interesting. Everything else are numbers on paper and paper you can not live.

Therefore many of the founders and companies run your test runs for pricing by under real conditions: They offer the same product at different prices. The prize, which brings the most profit, the better. Of course, do not offer one and the same customer for two different prices for the same product. In reality, the leaves but implemented quite easily:

In a retail store or a written offer, you can offer different prices for different customers.
On the Internet to drive traffic to your site to different landing pages, which is technically possible.
You can place ads at different rates in different regions or newspapers.
IMPORTANT: Of course you have all trial customers but then calculate the same price - and the best! And clarify afterwards about the price test for your customers. To offend any customers, but all can look forward to the best rate. The information about the "optimal" price you can ask for the test run, it is worth.

That doesn't mean we're perfect, but when we make mistakes we fix them.
As you learn as an entrepreneur, your dreams and goals, step by step to actually achieve
I have thought long what advice, what kind of advice I can give you in my Christmas e-mail on the way into the next year. It struck me again and again an article one, which I read last year about Michael Phelps, the American world-class swimmer, the say at the 2008 Olympics in Beijing and write 8 gold medals won. For this new record, he received from his sponsor a prize of 1 million dollars. With this money Michael Phelps set up a foundation whose first action was an educational program for children. This program was entitled "Dream, Plan, Reach".

In this program, children should learn to set goals, take responsibility and practice discipline. Dreaming, planning, achievement. Well, that could easily be the content of a training program for operators, right? This title is at least for me an apt motto for the next days.

I do not know how about you, but next to the hustle and bustle and the stress around the Christmas, for me is the time 'between the years', the days between Christmas and New Year, always something special. These days it is actually once quiet, there will be time to think, because I will not be distracted all the time by some everyday things and daily business. It's cold, darkness falls early and most people are in their homes. Like a veil settles a pleasant rest of the country. Time stands still a little. I see then back on the year that is ending and think about what I have experienced and done, how far I have come closer to my dreams. Then I think about what I have dreams and goals for the next year.

I have learned that putting through training, planning, goals and informed choice of action, anything is possible', Michael Phelps said in an interview. In fact, the program 'dreams, plan, achieve' a powerful tool. Read More