How to Set Prices for a Product

How to Set Prices for a Product? Know the Best Guiding tips for Pricing Decision

Most of the people are wondering to determine a suitable price for their work. There are lots of reasons behind it. Sometimes, they are not able to recognize their effort, skill, and time values. In this post, we will discuss how to set the best price for a product or freelancer works.

Look for your Competitors:

Competition is a critical factor behind the price tag. It is the number one factor that stands behind even though we put our money, knowledge, investment, and time to deliver a product. Before beginning, we presume that you have an idea, and you need to look for only resources.

Hourly Price vs Fixed Price

As a freelancer, it is vital to determine how you will charge your customers? Lots of people charge an hourly basis, and others charge a flat amount for the work. Sometimes hourly pricing is not a good idea because it may create doubt in the mind of buyers. Some freelancers may go slowly due to hourly prices, and some may provide the wrong information for their timing. Sometimes it happens the opposite way. For example, if you are a designer, you may require more time to finish work. You may be undercharged too. However, it does not mean that you can’t use the hourly price as a reference for you. If a person asks you to determine the cost of a project, you may estimate the hourly basis and estimate a total flat amount for your work. However, somebody may accept or decline your estimate. It is better not to negotiate with them and simply to adjust your offer of what you are willing to provide. Because no one likes to downgrade the reputation they earn during the lifetime, instead, you may provide less amount of service since quality is the king.

Receive your Advance Deposit

If anyone accepts your request, the first thing is to ask for an advance deposit for your work. Don’t start working until you receive a deposit because time is always valuable. If you don’t receive a deposit it means that the buyer may go for another freelancer.

Give Some more

It is always better to provide a little more than the buyer asks for is a free amount. This is happening in my Fiverr gigs, where I always give away some additional free plugin with my services. And if you can complete the task at a very cheap rate, try to adjust the balance amount by offering a discount to the buyer. Because, honesty is the killer instinct in business activities. It creates a path of trust and honesty and partnerships between the clients.

Watermark your Product

If you are a designer and suppose you are creating a logo for the clients, always use a watermark for your demo designs. After all, you are spending your time with the logos. Always use low-resolution images for your submitted demo works. Always try to stick to your budget even though you are losing your money. Because creating a partnership is a vital point in freelancer activities. The client will return to you if they satisfy with you earlier, and you have more opportunities in the future.

Set a Competitive Price

If you are selling a physical product, you have to set a competitive price. It does not mean that you need to set a lower price, but you need to set a reasonable price for your product. Beginners always find it challenging to find buyers as compared to reputed brands.

Your Price should be above Average

Initially, you need to go for market research; that is, you have to look for similar products, their quality and make a list of all of them with the prices they set. Your list should be comparable to each other. First, estimate the average price from the competitors and set a little higher than the average price. For example, for a book, competitors may charge ₹ 100, ₹ 30, or someone may go for ₹ 50. So you need to fix a price above ₹ 90 so that customers don’t feel it as very cheap with low quality or a very pricey one. From our 15 years’ experience, we found that people are ready to pay more for quality products or services. They will pay more for quality and value. Sometimes prices are also a reflection of the quality of the product. People always believed that cheap products quality is low as compared to premium products with higher prices.

Profit Making is the Key

At the same time, you need to look for profit-making. You have to figure out whether you are making enough profit for running your business. You had to accelerate your profit along with your expenses. Generally when the businesses grow, the expenses levels are also expand. So you need to set your price accordingly in correlation with the expenses.

The main point here is not to price your work instead to ensure that you are making sufficient profit for running your business in the future. Equally you have to contend with your competitors. And it is not making any sense, if you are spending more and due to that you are not making any profit.

Give Little Discount

You need to provide some slight discount to encourage customers in a timely manner. Discounts are also having psychological effects on the customer mindset even though the actual prices may be high. So, in the initial stages of your business, you need to give some discounts for your regular customers or clients.

Corporate Price

If you are dealing with a corporate client, you had to set a higher price for your products because they will very sell your products and go for further profit-making. In the case of software products, initially, you may not receive any amount. Still, you will receive a percentage as licensing fees or royalties for each sale they are making. It may be around 8 to 10% and maybe up to 20%. Once you reach a threshold level you may transfer it to your account. So depending upon clients and business types, you need to adjust your pricing behaviour so that you have reasonable amount of profit for your business or for your works.

Conclusion

Pricing is a dynamic object which needs adjustment according to time and types of business. For example, it is an excellent exercise to go for some discounts during Black Friday or during the slack season. And the pricing behavior also depends upon the business level and also the competitors’ behavior. Looking at all these, you have to decide your best pricing level that optimizes your profit.

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