Thursday, December 7, 2017

Tips on Finding Equilibrium with the Market through Price Maximization

Finding the right price to maximize profit through equilibrium with the market can be difficult. A product that is initially not selling well may be misplaced or may not be marketed correctly. The wrong words, language, or pictures may be used. However, this is only one compounding variable. Often new business owners overprice their products and customers can feel cheated once they find out. Below are a few tips on finding equilibrium in pricing that affords maximum sales and profitability.
  • Calculate the average price of similar products on the market to find what the ball park range should be. 
  • Calculate the top and bottom averages (i.e. top and bottom 20%) and determine their value. 
  • Compare the three ranges of products and what services and features that your product has. 
  • Based on that comparison determine where your product will fit in terms of quality, customer service, return policy, design, utility and customer reviews. 
  • It is important to ensure that you are not confounding your problems by having a poor marketing strategy that doesn't at least compare to your competitors. 
  • You can often start with the average price and then add and reduce price based on how your product compares. For example, if your quality is better you can add value while if your customer service is poor you can take some away. 
  • Remember to watch your competitors closely. Generally, consumers purchase the lowest priced product but do take into consideration reputation and overall quality. 

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