How do I price my products ?


One of the most common questions that come into mind when in business or planning to start one is, “How do I price my products?” The short answer is marketing.

Every day we hear stories of people spending ridiculous sums of money for all kinds of common products or services. People are paying five to six figure for NTFs. (Non-fungible tokens).

NFTs can really be anything digital (such as drawings, music, your brain downloaded and turned into an AI), but a lot of the current excitement is around using the tech to sell digital art.

The issue here is you can’t touch what you buy. You own something that is one of a kind that doesn’t exist in the real world.

Is Java Coffee really worth two times what a regular cup of coffee costs?

Or is it just the perception that their marketing has created? And therein lies the message.

If you think about it there are hundreds of products and services that you felt were ridiculously priced the first time you heard about them.

Features And Benefits

The first lesson any advertising student learns is you stress the benefits of the product or service in your advertising — not the features.

It’s not what the painting depicts that makes it valuable — it’s who painted it.

A sedan has four doors. A feature. So what? The benefit is that grandma can get in and out easier; and there’s more room for the family.

To the right market that means convenience and life is better.

So, when you sit down to decide what you or your product is worth, the marketplace only dictates the price if you allow it to do so.

Positioning Your Price

You may be thinking that this looks good on paper but how can I ask more than my competitor for the same service?

Let’s go us a haircut analogy. I pay Kes 200.00 every two weeks.

My barber could ask Kes 500.00, and he would lose me as a customer. But he might gain several people happy to lay down Kes 500.00 for his services.

The point here is that you target your products and services to those people in a position to pay for it and present them with the benefits that make the service worth the price.

People will often go up in price more quickly than they will accept a lower price because the perception of value is decreased if the price is reduced.

Is this easy? Of course not. But when you begin to think in these terms and construct a plan it seems more doable.

Is It Logical?

This brings us to the final thought for this article. Here is the rule; “When emotion and logic come into conflict emotion always wins.”

As much as we would like to believe that we look at things logically before we buy them, we do not.Does “impulse buy” ring a bell? Did you ever buy a CD to get one song? Human beings make emotional decisions then create a logical argument to support that decision. 

 

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