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How to Price your Products Rightly?

In post before the last one, we discussed about the advantages and disadvantages of offering products for low (reduced) price. We will continue on that pricing topic and this time with pricing products in the most rightly way.

• The first step to product pricing is the correct measuring of costs for raw materials, production and supply costs, marketing and sales costs, after sale service costs and business operating costs.
• Then we compound all the above costs for a particular time period and then divide that by the total number of products we can produce (or producing) in that time period. And that is the cost of price. We assign a profit percentage to that price and that is our “Selling price”.
• Any change in the first mentioned costs can affect the cost per unit and thus can alter the profit percentage of the product.
• One other major thing which affects product pricing is competitor pricing. Many companies, following a bulk production strategy, can price their products cheaper than us. Specific marketing strategies and cost management are required to tackle this issue.
• One way of rightly pricing the product is to keep the product price corresponding to your competitors. This strategy works if your production costs are same or lesser than your competitor (or industry standard).
• One other way is to lock the ‘cost of production’. Hiring peoples on a long-term basis, buying raw-materials in bulk (or at low-price consistently), outsourcing to onshore and offshore locations, and hedging against risks and fluctuation are some methods to achieve this goal.

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