There are a lot of factors that affect the decision of price-pointing any given product.
Some of these factors are:
Pricing of similar products in the market by competitors?
Pricing of Similar products in the market by us?
Are we okay with launching a product at a drastically-different (high/low) pricing than our other products?
What is our usual product pricing & profit margin% for all other products that we have so far?
All the costs that went into manufacturing, marketing, etc.?
Ideally here we will include the operating expenses (like packaging costs, supply chain costs, etc.), the interests we pay on liabilities, and the taxes we pay to the government.
Length of the distribution chain - How many hops does it take before the product reaches in the hand of our customer?
Net Profit Margin% that we want to make?
Are we willing to take a hit in profit?
Are we willing to sell it at loss, for some time, to capture the market?
Is our product better than the competitors' products?
Who is our TG?
What price-ranges does our target audience usually buy?
What our customers perceive of us?
What kind of brand are we - new & popular, new but not-popular, old & popular, old but not-popular?
Do we plan to launch this product under our existing brand-name or with a new brand-name?
Where will we be selling it - on own website, on other online stores, on offline stores?
If we sell offline, a price multiplier will have to be added to make sure that all the people - including wholesalers & all the retailers in the chain can make a profit by selling our product.
Is it a necessity or a luxury or a premium product?
Is there such a stiff competition that the final price is already decided?
Is there a scarcity of this product in the market?
After you collect the above data points, you will be able to start pricing calculation - that we have done in the 2nd part of this story here:
https://saurabhkautilyagupta.blogspot.com/2020/03/pricing-cost-expense-tax-gross-net-profit-margin-markup-product-management.html
Pricing of similar products in the market by competitors?
Pricing of Similar products in the market by us?
Are we okay with launching a product at a drastically-different (high/low) pricing than our other products?
What is our usual product pricing & profit margin% for all other products that we have so far?
All the costs that went into manufacturing, marketing, etc.?
Ideally here we will include the operating expenses (like packaging costs, supply chain costs, etc.), the interests we pay on liabilities, and the taxes we pay to the government.
Length of the distribution chain - How many hops does it take before the product reaches in the hand of our customer?
Net Profit Margin% that we want to make?
Are we willing to take a hit in profit?
Are we willing to sell it at loss, for some time, to capture the market?
Is our product better than the competitors' products?
Who is our TG?
What price-ranges does our target audience usually buy?
What our customers perceive of us?
What kind of brand are we - new & popular, new but not-popular, old & popular, old but not-popular?
Do we plan to launch this product under our existing brand-name or with a new brand-name?
Where will we be selling it - on own website, on other online stores, on offline stores?
If we sell offline, a price multiplier will have to be added to make sure that all the people - including wholesalers & all the retailers in the chain can make a profit by selling our product.
Is it a necessity or a luxury or a premium product?
Is there such a stiff competition that the final price is already decided?
Is there a scarcity of this product in the market?
After you collect the above data points, you will be able to start pricing calculation - that we have done in the 2nd part of this story here:
https://saurabhkautilyagupta.blogspot.com/2020/03/pricing-cost-expense-tax-gross-net-profit-margin-markup-product-management.html
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