I thought this was a given but I recently learned that it’s not. When you sell a product or service, you have to price it in such a way that you make some profit from it. How much profit? Well, that’s up to you.
But never sell something less than its actual cost.
Again, I thought this was a given. I was just as shocked as you when I learned that some actually do this. Their product costs say, $10 and yet they sell it for $5.
You would think, well, that doesn’t make sense. Right? Some chalk it up as “marketing expense”, a way to get leads. But what kind of leads are you attracting?
If you’re not confident that your market will pay for your product at a rate that it makes you some sort of profit, then you’re either targeting the wrong market or you’re selling the wrong product.
Now, pricing can be tricky, for physical products and especially for services. You have to hit the right amount. You have to hit that “sweet spot” where you are able to price your product or service so that it reflects its value and at the same time, the right market will be comfortable paying for it.
The thing is, it takes trial and error to get this sweet spot. You can start with a low pricing point and then raise it up gradually until your market complains or you have a hard time getting enough sales to keep your company running.
But never, ever underprice your product or service.
Your price tells people how much value you see in what you offer. If you’re pricing is crap, then your market will see it for how you see it - crap.
Pricing isn’t just about covering your raw cost plus profit. Pricing is how much value you see in what you offer.