How To Determine What To Price Your Product Or Service Within Your Small Business

How do I determine what to price my product or service?

The first thing you have to understand when pricing your service is the cost to do all these things provide simply a baseline. In other words you say, "The materials cost so much, laborers cost so much, marketing costs a whole lot - always more than anything else - and now here's what I'll charge." That is not a good idea, because maybe the price that you end up with is too high, which simply says you have to find a different way to cut the cost. You simply can't sell that product at that price. The costs simply provide the bottom line; you don't want to go below that because then you're just losing money. Of course, if you'd like to do that, and you have the money, that's great, but normally that's not what you want to do. That's the first thing to think about when pricing your services. The second thing is to look at what your competition is charging. If you're selling a brand new product, you can look at the cost savings that are involved. Your strategy for a brand new product is to go in fairly high. As competition comes later on - because you can't protect your device perfectly; there's all kinds of ways of getting around even patents or copyrights - you lower your price and do it that way.