Pricing for your products or services shouldn't be an afterthought, it is a key part of panning a business, product and/or a services launch. This week on Sweat, Grit & Hustle, Tracy is covering a question from one of her clients who wanted to know if she just used direct costs (to produce her product) to work out a selling price, or should she include general costs such as accounting software, shopify fees, and card transaction fees etc.

 

KEY TAKEAWAYS 

 

• Whatever we sell, we want to at a minimum cover all the costs, not just the cost and time it takes to make the product or deliver the service, it should cover everything including the tax we have to pay. 
• The seven common pricing strategies to help you plan for your future business, products and services are as follows:
• 1. Value Based Pricing - Value-based pricing is a strategy of setting prices primarily based on a consumer's perceived value of a product or service. Value pricing is customer-focused pricing, meaning companies base their pricing on how much the customer believes a product is worth.
• 2. Competitive Pricing - Competitive pricing is the process of selecting strategic price points to best take advantage of a product or service based market relative to competition. This pricing method is used more often by businesses selling similar products since services can vary from business to business, while the attributes of a product remain similar. This type of pricing strategy is generally used once a price for a product or service has reached a level of equilibrium, which occurs when a product has been on the market for a long time and there are many substitutes for the product.
• 3. Price Skimming Pricing - Price skimming is a product pricing strategy by which a firm charges the highest initial price that customers will pay and then lowers it over time. As the demand of the first customers is satisfied and competition enters the market, the firm lowers the price to attract another, more price-sensitive segment of the population. The skimming strategy gets its name from "skimming" successive layers of cream, or customer segments, as prices are lowered over time.
• 4. Cost Plus Pricing - Variable cost-plus pricing is a pricing method whereby the selling price is established by adding a markup to total variable costs. The expectation is that the markup will contribute to meeting all or a part of the fixed costs and yield some level of profit. Variable cost-plus pricing is particularly useful in competitive scenarios, such as contract bidding, but it is not suitable in situations where fixed costs are a major component of total costs.
• 5. Penetration Pricing - Penetration pricing is a marketing strategy used by businesses to attract customers to a new product or service by offering a lower price during its initial offering. The lower price helps a new product or service penetrate the market and attract customers away from competitors. Market penetration pricing relies on the strategy of using low prices initially to make a wide number of customers aware of a new product.
• 6. Economy Pricing - Economy pricing is a pricing strategy where products have lower prices due to low production costs. Economy pricing allows businesses to price products according to their production value because they don't acquire the extra costs of advertising or marketing.
• 7. Dynamic Pricing - Dynamic pricing, also called real-time pricing, is an approach to setting the cost for a product or service that is highly flexible. The goal of dynamic pricing is to allow a company that sells goods or services over the Internet to adjust prices on the fly in response to market demands.

 

BEST MOMENTS

 

‘You’ve got to work backwards’ 

‘Value based pricing is not about trying to undercut your competitor, in fact it’s the opposite’

‘We know the prices of new tech is going to drop, but some people want it now’ 

‘If you are trading time for money then you need to make sure you’re able to deliver at a rate that gives you the profit you want’ 

 

ABOUT THE HOST

 

With over 25 years of experience in IT Management and Business Consulting and 10 years plus helping hundreds of property investors through training, mentoring and speaking; Tracy founded Witch Property. Tracy is renowned for her knowledge on property & business and her ability to sell, market and grow the property individuals and companies she works with. 

With a wealth of experience in business and property, Tracy has a rare capability of mixing her skills in this space with her knowledge on the mind, to ensure a truly rounded experience for growth and development.

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PODCAST DESCRIPTION

 

This is a podcast for anyone starting out in business with a willingness to learn from others. Hear stories from guests that have gone from zero to hero in their business and find out what advice they have to share. Tracy will also be bringing you stories from everyday people who are just starting, or are only part way through their own story to success.