How to price a product

JyotiJyoti Posts: 3subscriber
Hi all,
Can someone recommend a good book / audio book on pricing strategies. I know price of a product is not just determined by cost + profit margin. There is a lot more study that goes to understand the customers. I am looking for direction to understand these tactics. Regards,Jyoti Ramnathwww.CraftMyGift.comIndia

Comments

  • 4Founders4Founders Posts: 0subscriber
    There are a number of different approaches to pricing.  What you described as cost + profit margin is often called bottoms-up pricing.
    Other methods include interviewing customers to determine how much value they derive from your product, then assigning a hard price to that value.  Another popular approach is to benchmark product against those of your competitors, and base your price on theirs while adjusting for any additional value your product offers.
    My ebook describes pricing strategies for small businesses in greater detail if you`re interested in specific tactics you could employ.
  • JyotiJyoti Posts: 3subscriber
    Thanks for your inputs. Till now each product we have sold has added a lot of value to the customers. Many customers have written wonderful letters of appreciation to us. Since we are into the business of creating personal & unique gifts, people have also come back saying the recipient almost had a tear in the eye when they saw the gift.
    We have few competitors in this area & we are priced quite low compared to them. But in terms of value I am sure we are providing equal or sometimes more value to the customers. Thats why I felt we have to really evaluate & see if we are doing the right pricing.
    Digging through some old posts, I saw reference to the book "Strategies & Tacktics of Pricing" by Thomas Nagle. I am thinking of reading through that book too.
    4Founders, I`ll go through your E-book too.
    Will post my learnings here.
    - Jyoti
    Founder, CEO
    www.CraftMyGift.com
    India
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