To price his products, an entrepreneur must understand his target customers to set a price that allows him to cover his costs and make profits. He must set a clear profit target and must consider how his competitors are pricing comparable products.Continue Reading
An entrepreneur should price his products according to how much his customers are willing to pay, how his product is positioned within the market and the volume of products he intends to sell. Before deciding to lower or raise his price, a business owner must first consider what is currently working for his business.
To raise the prices of his products, an entrepreneur should keep track of the effects of raising such prices on his sales and gross profit. He should experiment with different prices each month and unique bonus offers to determine what works best for his customers. An entrepreneur should avoid increasing his prices steeply over a short period of time; instead, he should increase prices incrementally.
A businessman can implement tiered pricing by bundling products, which allows his to cover his bottom line. He can use differentiators, such as providing personalized customer service, to price his products above his competitors. Pricing products below competitors may start a price war, which is a losing proposition.Learn more about Managing a Business