How to Price Your Product Based on Your Market

 

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When it comes to choosing a price for your offerings, there are a number of things to consider. The first one is the value of the product or service you’re providing.

When determining the value of what you offer, there’s no better way than putting yourself into the shoes of your ideal customer. Will it be worth it to them to have this problem solved? To have this part of their life enhanced? It doesn’t matter what products you sell; it could be a service, advice, or items like jewelry and decorative notebooks.

You are providing value in your customer's lives. You just need to get a feel for how much they value what you are selling.

After you determine the value, you need to determine what the market will bear. Usually this is done by looking at your competitors' pricing. By doing this, you’re just setting the bar. Sometimes you’ll be seen and compared to competitors, so you don’t want to be just like them. Be different. Do things that other providers or product sellers think you and your industry don’t know.

That’s why you need to be aware of the pricing of your market, without letting it dictate your decisions.

There’s always a place for you to define your own category for yourself.

Your Business Model: One to One or One to Many?

If your market is fairly small, or you don’t have access to a lot of the people in your market at this point, it makes more sense to have higher prices and sell fewer of what it is that you offer.

As you start to scale and are able to reach more people, your prices can then decrease to reflect this reality. This might seem kind of counterintuitive, but it actually makes total sense when you think about it from a business perspective.

Maybe you’re not charging enough to feel comfortable offering these packages or products. This can happen when you know your value, but you just haven’t been tested or proven in the marketplace yet. In that case, it makes sense to work for free or give away some temp polls and get feedback so that you are confident before you start offering your packages at a certain price point.

Another option is offering your products or services at a lower price point before receiving enough positive feedback to raise your prices over time. This is a great way to go no matter what business you’re in, because it will help you build up your confidence as you move forward and prove to yourself and your future customers that you’ve got the chops.

Pricing is something you grow into. You can’t start out charging something you don’t feel comfortable charging. But you also can’t charge a price that makes you feel resentful about your services or products at that amount.

Should You Put Your Prices on Your Website?

If you’re selling something that people can buy off the virtual shelf, you should put your prices on your site. People need to know what it costs to buy your product. If instead, you offer a premium service and the price will vary depending on the scope of the work, setting a price range is a great way to go.

Having prices online helps you to filter out the people who aren’t able or willing to invest with you yet. If you’re just getting started and you don’t want to filter anyone out because you just need to get clients in the door, then ask people to get in touch with you for pricing information.

If you don't have prices on your site, people will likely assume that your product or service is more expensive than it really is, so you need to be prepared with a great sales conversation to deliver your pricing.

So the bottom line is this: unless you use a variable pricing model or you plan to increase prices fairly quickly, you want to put prices on your website. Ease into your pricing structure and let it evolve as you evolve and are able to reach more people.

A version of this post originally appeared on the author's blog. 

Nathalie Lussier got her Bachelors in Software Engineering then promptly turned down a “stable” job on Wall Street to start her own online business. She’s a sought after digital strategist who teaches people how to get techy with their business. Get your Free Website Checkup at http://GetTechyNow.com.

The Young Entrepreneur Council (YEC) is an invite-only organization comprised of the world's most promising young entrepreneurs. In partnership with Citi, the YEC recently launched #StartupLab, a free virtual mentorship program that helps millions of entrepreneurs start and grow businesses via live video chats, an expert content library and email lessons. 

About Nathalie Lussier

Nathalie Lussier is an award-winning entrepreneur and host of the Take Your Business Off The Charts web show and annual live event held in New York City. She's also the creator of the free 30 Day List Building Challenge for entrepreneurs who are ready to scale.

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