Pricing Your Product

First things first; there are basically 2 ways to price a product:

1. Skimming : low number of customers, high profit margin
2. Mass : high number of customers, low profit margin

So which one is the right one? Well that all depends on the relationship between you and your customer and the amount of work you want to put into selling your product. The bottom line is, you’re only worth the price you ask for.

Here’s an example; everybody loves ice cream, right? Well, we’ve all been down that isle in the grocery store and seen the dozens of options to choose from. The prices range anywhere from $2 to $10, but what’s the difference? The cost to make the store brand is actually a bit lower than it is to make say Häagen-Dazs. The cost difference stems from the packaging, marketing, and sales price. With this example and many others like it, simply because the company is charging more, the customer believes it is worth more. It’s a strategy that works, and studies have been done to prove it! So, from wine to ice cream, or anything in between, it works!

Here’s the breakdown; with the skimming strategy, customers are more likely to have a high satisfaction rate, because of a more personal relationship with you, or a more customized product. And with the mass strategy, the customer will expect more service, and more product for their money, which means more work for you. So the right answer is…whichever one works best for you and your company. The most important thing to remember is, no matter what you choose, you’re only worth the price you ask for!