One of the most important elements in business is pricing. After all, it’s an essential component in calculating your revenue. Fortunately, you have various options on setting the cost of your goods in the market.
Here are some of them:
1. Minimum Advertised Price
This is ideal if you’re a wholesaler with hundreds of online retailers. In this strategy, you set a minimum price for your goods, which your vendors need to follow. The challenge with this one is some might increase the cost without your knowledge. In the process, it could hurt your brand.
Fortunately, there are already tools, such as PriceManager, that can help you keep track of who complies with the minimum advertised price policy. They notify you and the seller if there’s a breach in pricing rules.
2. Competitive Price
In competitive pricing, the value of your goods is more or less the same as the other similar products on the market. The nice thing about this is it levels the playing field, particularly if you’re a new competitor.
The downside is you’re at the mercy of the price movements of the leaders. You could get in big trouble if they lower the price, and you don’t have enough wiggle room.
2. Markup Price
This is the easiest and simplest way to price your products. With a markup price, you just need to know the total cost of producing the item and add a percentage. It can range from three to over a hundred percent, depending on many factors. These include the type of product, demand and quality.
The potential challenge, though, is it might make your product less competitive, particularly if the cost of production is already high. It’s also difficult to ascertain the best markup for the goods, and this might not work if you’re a service-oriented business.
There’s no doubt that for your products to sell, it needs to have a competitive price, but there should be more to this to make a profit.
Consider increasing the value of the goods, innovating customer experience, and offering top-notch quality service. In the end, consumers would always opt for what gives them the best value.