How To Price A Product
One of the biggest problems I know many businesses encounter is pricing a product. You have a product or service and no idea what it is worth.
The simple way to price things is to analyse what the materials cost and how long it took you to make. Now figure out how much you would like to earn a month, how many you could make in a month and you have your figure. How simple is that!
The thing that really matters though is can you sell it. And harder still, how are you going to sell it?
So let’s look at the problem whatever it is you are selling actually solves. Is it a real problem? Is it a problem that people want solving quickly? How strong is the competition (in terms of price, scarcity, quality, brand)?
Your product or service may be selling a dream or lifestyle and not there to solve a problem at all. But you still need to know if there is a demand, and if there is how to market it, and at what price.
All of these things and many more can be added together to get to the most important point of all: Value.
Value is not about price. If I offered you a £20 note and said how much would you give me for it, the answer would be close to £20. This ‘object’ is really easy to value. If I offered you a way to make a £20 note, what would that be worth? Immeasurable, right? (if you knew how to make one, you could make as many as you needed, plus you now had that knowledge to sell).
Yet what is the difference here? Take a step back. The problem most people have is that they are too close to what it is they do. They can see the target, but not the weapon. So what is that weapon? Well, it’s YOU.
There is you, and there is your audience. And now for the important bit, there is also the VALUE that you give to your audience. It is NOT the product or service you are really selling. The £20 note is always worth around £20. It is what you can add to that that will make it so very valuable.
You can look at how much you value your time (and you should), but there is only a finite amount of time (so if this is all you valued you would end up with a fixed amount and you may as well go and get a safe ordinary job).
You can look at the object you are selling and value it as above. Again, very simple to do, but there’s no magic there (and without magic, business would be very boring). So this leaves you with ‘value’.
Value is also simple. Value is a perception. You have the seller, the buyer and the product or service. But none of this matters if value is missing. Value is the glue that makes the deal possible and let’s you state whatever price you want to.
All you have to do is figure out the value. The ‘what is it worth to me’ price. It is why all marketers look at benefits rather than features. And the way to do that is to look at the fundamental reason for most things: solving a problem. The harder the problem and the more needy the person who needs it solving, the more value you can add. If the thing is also desirable, you can add even more value to it. Add in some scarcity and up it goes again.
Think about what else you can add. The more time you spend on this the better. It is the part most people miss, so you can now count yourself in the top 10% of all marketers just for knowing this one word and what it means.
If you are selling or making anything, always think about value, not pricing.