Millions of inventors and entrepreneurs set out every year with good ideas and great products, but what separates the many from the few is executing the fundamentals. One of these basic tenants that many businesses struggle with is setting the right price on your product and achieving the delicate balance between making a profit and keeping merchandise competitive.
There are many factors that go into pricing your product. Many companies will over-estimate or under-estimate how much a retailer is willing to pay for a quality product, as well as what the end-consumer will pay.
Here are a few key tips to competitively pricing your product to retailers:
- Know your target consumer – Who are you selling to and why would they want your product? Take your time to do thorough market research before deciding the value of your product. Many companies will hire outside companies to help in this crucial step.
- Know all your costs – This includes expenses like your sales and marketing team, cost of labor and materials, salary expenses, as well as your company’s future growth plans, your expected profit margin, and a realistic revenue goal.
- Know your competition –Making a head-to-head comparison between your competition’s prices and costs can be very helpful when determining how to price your product. You can bet that any retailer you are selling to will check out your competition to gauge your prices.
- Know your market – Are there new laws being considered that may affect your business? Or maybe the price of your materials has been on the rise? Consider the future stability of your market when making price decisions.
Everyone wants to sell to big-box retailers like Wal-Mart and Best Buy, but don’t forget that bigger retailers might mean a higher sales volume, but don’t expect to make a high profit off of them. Smaller retailers, on the other hand, will accept higher prices, but offer small sales revenue. Knowing who you are selling to is key to setting the right price for your products.
Lastly, after you set the right price, don’t forget to continuously monitor your prices after you get into stores. Keep an eye on the market, your competitors and the profit of your products. Be ready to shift the price of your product when it is necessary.
Striking the right balance between earning a profit and remaining competitive can be difficult, but with the right tools and know-how the task can become a little less daunting and help set your business up for success.
To learn more how to price your product for retail, visit www.retailbound.com