Millionaire Acts

You are in a business already. You have the products or services to offer. But how do you price your business products or service? We all know that price depends on the law of supply and demand. That is, a strong demand with low supply can command a high price while a strong supply with a low demand can lead to lower prices. In economics, we have to determine the equlibrium price, which is where the supply meets demand. The equilibrium price theoretically should be the price of your products or services.

Here are some of the tips that you can use in pricing your business products or services. You don’t want to price it too high that buyers cannot afford it. Or you don’t want to price it too low either that you won’t have a modest profit for your business.

Consider your competitors. First of all, I think to first consider what are the prices of their products or services. Take a study on it. Try to adopt a price closer to their products. Look at their products and think of ways on how you can command a higher price. You can consider packaging. The more presentable and appealing your product is, the more it can command a higher price.

Price is always based on cost. Of course, running a business involves a lot of costs from the salaries of your employees, utilities bills, marketing costs, space rental, to raw material costs. Try to adjust the price of your business product based on these costs. If you have low raw materials costs but you are located in a hotel with a high space rental costs, then you should charge higher price for your products.

Hidden Cost. Besides the usual costs stated above, you can also factored in hidden cost such as the amount of time you can collect your accounts receivables. If your clients get your products not on a cash basis, say for example, promised to pay the full amount after 30 days, then charge your products higher! You could have invested that money and could have earned an interest if you collected it earlier. The interest income that was foregone is the hidden cost.

Test your market. Know the marketability of your product to know its demand. Test it first with your friends or relatives. If it’s a food product, have a free taste. Then test it further by joining bazaars. A good quality product can easily be marketed thru word of mouth. And as your product grows in demand, you can slowly increase its price.

Perishable products. Food is the product of most businesses because it is one of our basic needs. However, we all know that food rots or expires. In order to turn this from disadvantage to an advantage, then establish a buy-one-take-one promo perhaps with a little higher price than the supposedly price for the two products.

Value-Added product. You can also command a higher price to products perceived with value-added. Examples of these are toothpaste with a free toothbrush or a haircut with a free massage.

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