From the course: Financial Tactics and Tools to Run Your Business
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Building pricing strategies
From the course: Financial Tactics and Tools to Run Your Business
Building pricing strategies
When asked about my basic strategy for pricing. My answer is always more than it costs, but less than its value. The challenge is cost and value are subjective. The cost of the product is everything that it takes to deliver that to your customer. All of the manufacturing technology, delivery, marketing, supply chain and other costs of getting your customer whatever you're selling them as you could take the sum of these costs. You're able to create an average cost of goods sold, and this is how you can calculate your break even price. Price is also the visual communication of value when you're presenting it to your customer. How expensive your product is is an important indicator of customers of what you're selling. Your price suggests the premium that you're trying to communicate. If it looks like fast food, it should be priced as such. But if it looks like a fancy restaurant, the price could be so much higher per plate. Most practically, you can utilize some quirks of human behavior…
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