What are the criteria to consider when pricing a product?
After the design of a product, one of the last steps that the product must go through is the one according to which it must be priced. Very complex as a procedure, you must take some key elements into account in order to determine the value of it so that you have profits.
Take into account the demand in the market
Among the criteria that exist to evaluate at what exact price you should put your good or service, we find the demand. According to pricing theory, many factors can affect the sensitivity of demand to price. Therefore, in order to have some knowledge about the increase in demand in relation to the price, companies must plan consumer surveys. The objective of this survey will be to get an idea of how the consumer perceives the purchase and what the competing sellers are offering. To achieve this, we recommend the use of several techniques. In particular, the psychological price calculation method. This method allows you to determine, on the basis of a questionnaire, the maximum and minimum cost at which your product could be sold according to them.
Take costs and competition into account
If you can already know the threshold for the price of the product from the demand, then you as a company or business should be able to minimize it. Indeed, you must necessarily take into account certain costs to arrive at a price (marginal cost, average cost). Lastly, it is imperative to take into account the competing information in the price setting. This is the third level that you must necessarily check to decide the price of your product. At this point, you'll need to scour the field to gather what you need. In this case, go through the history of prices used by other companies. Then, based on the results you get, analyze this data and you will be able to choose the price at which you will sell your product.