Finding the perfect price for a product is all about balance. Going low will eat into your income, but going too high will lose the trust of consumers. Some of the most efficient business tactics can be found on bullpreneur. By incorporating some of their tips with your pricing decisions, your business will continue to grow. 

1. Profit Margin

The amount of money you receive after a product sells is the most important part of pricing. With a bad profit margin, it doesn’t matter if the product is breaking sales records – your company will still be broken. Smaller things have to be considered here, including the cost to ship, place on shelves and to market. All of that eats into what should be the final price of your product. 

Retail pricing is tied to keystone pricing, and follows a traditional set of rules for each retailer. There is more flexibility with the manufacturer suggested retail price, but also a higher chance to get undercut by a competing product. When concentrating on the profit margin, your results may not always be perfect. The idea is to make sure that the price is close to what you want without being too outrageously low or high. 

A healthy profit margin can erase small inconsistencies with regional pricing, so finding the magical number benefits you in several ways. Take step one of pricing a product as the step that validates the entire process. 

2. Bulk Pricing

Will the product be bundled with other products? This changes pricing, but is an acceptable way to guarantee the sale of slow-moving items. Bulk pricing will move low tier items while making your most important item look like a better deal. 

The downside to bulk pricing is that the lower tier products will need a price adjustment when sold individually. So even if bulk pricing helps you, it also forces a pricing change to items that are already selling in the market. 

For new companies, this type of pricing lacks flexibility since they won’t have the track record with consumers. A larger company has room to maneuver, and can sometimes get away without affecting the price of their lower tier items. 

3. Brand Recognition

A recognizable brand can charge more for the exact same product from a competitor. Brand is the final variable when it comes to deciding the price of a product. An unrecognizable brand has to price their products lower than a long running company. This in itself creates a problem when you are already close to the minimum profit margin. For smaller companies, bulk pricing is a way around this issue. And in some instances, skipping a retail storefront and selling online will keep the profit margin honest.  

Wrap Up

If you want a profitable business, then it starts by knowing the ins and outs of your product. This will help you understand its value, and how much an individual is willing to pay. Good pricing keeps mistakes to a minimum so that you can enjoy consistent growth with your business.