Pricing

Price is only one of many competitive parameters, you should also pay attention to other conditions.

Eventually, an independent business owner must price his/her product/service – to many this is unexplored territory. However, it does not have to cause too much trouble – you just need to be aware of relatively few conditions.

Market mechanisms allow you to fix a high price on your product/service if there is a great demand and a poor supply - oppositely, if there is a poor demand and a surplus of similar products/services in the market you may be forced to fix a low price.

As price is only one of many competitive parameters, you should also pay attention to a number of other conditions:

Expenses

Before your product/service reaches the customer, a number of cost accumulating activities have taken place – activities such as:

• Purchase, cost of sales and maybe also raw material processing
• Wages
• Freight, import duty
• Administration, etc.

Sales price

Once you have determined your expenses you can easily fix a break even price on your product/service. Add your required profit and you have a sales price. Do not forget to add 25% VAT/moms.

The calculation of the sales price could look like this:

Target Group Demand

Your target group conditions also influence the pricing:

• What are the customer´s requirements, buying motive, expendable capital?
• Season, trend, fashion
• The customer´s price expectations – psychological price, corporate image, price = quality, etc.

Put yourself in the customer´s place, then fix the price. During periods of low consumer expenditure it may matter whether your product/service is a necessity or a luxury item.

Market Structure

Depending on the competitive situation in your market you must at least investigate the below:

• General price level of the product/service
• Are the competitors campaigning on price?
• Which other competitive parameters apply?

If price is a parameter you must consider if other products/services are interchangable with yours. The higher interchangability the more the customer gains from purchasing the cheapest product/service.

Afprøv gratis et regnskabsprogram Toke er iværksætteren bag regnskabsprogrammet Billy. Han satte sig for at lave Danmarks nemmeste regnskabssystem. Han er så stolt af det, at han giver dig en 30 dages gratis prøveperiode - Der er ingen binding efter 30 dage. 20.000 virksomheder bruger allerede programmet. 2 minutter og du er i gang Billy er et online regnskabsprogram. Når du registrerer dig, får du en kort introduktion, og du er klar til at bruge programmet. Så nemt er det faktisk. Klik, indtast email og kom i gang Anbefaling godkendt af Startupsvar.dk

I don’t want to look too far ahead. The journey is what’s happening right now, not what’s on the finishing line.
– Sabirul Islam, indisk iværksætter

Sitemap