OnDemand WTP Pricing Research

Everything You Need to Know About Pricing a New Product or Service | Invoiceberry Blog

Whether you’re a new business launching your first ever product or service, or simply adding a new addition to your range of products or services, pricing is one of the most crucial aspects. It closely ties in with your production and marketing, which helps determine the price you need to set. The right price can really make or break sales and define the future life cycle for your product or service. On one hand it’s essential that you make enough profit to allow your company to continue running and on the other hand you need to make sure your price isn’t a figure that will scare away potential customers. Thus getting it right is paramount.

The basic no-brainer method

This quick guide will give you a nutshell of what you need to consider to make sure you are pricing your product or service right. So to begin with, an analysis of your revenue versus profits is important. The first thing you need to know is at what point will you be breaking even and from what figure onwards will you start making a profit. Start by adding up all your costs that went into the product or delivery of your product or service. This should include office space rent, employee wages, utility bills, suppliers’ costs, product materials, etc. The final cost figure that you reach after adding all this up is the break-even point. If you make anything less than that, you are going in a loss. So taking this as a starting point, you can decide on a percentage of profit that you’d like to make and add it to the total cost. Let’s say your monthly costs are £10,000 and you wish to make a profit of £1000 every month. To achieve this profit level you simply need to set your product or services at a price that can bring in a revenue of £11,000 every month. This here will also assist you in giving a minimum figure in terms of sales that you should aim to achieve. For you it might mean that selling at least 10 products will bring in a sale of £11,000.

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Everything You Need to Know About Pricing a New Product or Service – Invoiceberry Blog.

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