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Faizan
A new product can stimulate revenues for a company. In order to do this, consumers need to try the product and like it. When determining a price for a new product, look at your competition, your prospects and the costs of actually producing the product.
Sizing Up the Competition
Review what your competition is doing before you set a price on any new product. You need to know what your customers and prospects are already expecting to pay for a product that you plan to add to your product line.
Don't look at competition to follow them but examine what they are doing well and what they are doing poorly. You can learn a lot by looking at their product, the packaging that it comes in and how they market to customers
.
Determine if you will make a product that is superior or try to make the same product for less. Knowing what niche of the market you are targeting will help you determine a price point and acquire the right information about production costs.
Initial Offering Price
When a new product comes out, the public is often a bit shy about trying it. After all, it's something unproven. If your company is already well-established and well-respected, this may not be as big of an issue compared to new products by new companies. However it is still an issue.
Give people a reason to try your new product. The best way to do this is to offer it for an initial period at a lower cost or in sample form. Once you have won your customers over, you can increase your prices. Since the initial offering was a trial or limited time offer, your customers will not be shocked when the prices go up.
Price Now, Build Later
If you are looking at manufacturing and production costs, you may be tempted to look at your cost basis per product and determine your price based on that. The reality is that you always need to price your product higher that what it costs to make it, but you can find yourself with a lot of product sitting on store shelves and warehouses if you don't have the price set prior to building your products. You may be forced to offer sale prices to move inventory. Determine your price and then determine if it is cost-effective for you to roll the product out. If it isn't, you need to negotiate lower prices or abandon the product.
Sizing Up the Competition
Review what your competition is doing before you set a price on any new product. You need to know what your customers and prospects are already expecting to pay for a product that you plan to add to your product line.
Don't look at competition to follow them but examine what they are doing well and what they are doing poorly. You can learn a lot by looking at their product, the packaging that it comes in and how they market to customers
.
Determine if you will make a product that is superior or try to make the same product for less. Knowing what niche of the market you are targeting will help you determine a price point and acquire the right information about production costs.
Initial Offering Price
When a new product comes out, the public is often a bit shy about trying it. After all, it's something unproven. If your company is already well-established and well-respected, this may not be as big of an issue compared to new products by new companies. However it is still an issue.
Give people a reason to try your new product. The best way to do this is to offer it for an initial period at a lower cost or in sample form. Once you have won your customers over, you can increase your prices. Since the initial offering was a trial or limited time offer, your customers will not be shocked when the prices go up.
Price Now, Build Later
If you are looking at manufacturing and production costs, you may be tempted to look at your cost basis per product and determine your price based on that. The reality is that you always need to price your product higher that what it costs to make it, but you can find yourself with a lot of product sitting on store shelves and warehouses if you don't have the price set prior to building your products. You may be forced to offer sale prices to move inventory. Determine your price and then determine if it is cost-effective for you to roll the product out. If it isn't, you need to negotiate lower prices or abandon the product.
Posted in: Products & Brands
