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  2. How to determine the value of your product?

How to determine the value of your product?

Paul VanZandt
4 replies
We've gone through multiple different iterations of our pricing scheme, and will probably go through more in the future too. What do you use to gauge what a fair value is for your product?

Replies

Joseph Natoli
LOOFT- A/C Redefined
I think these are all great options for pricing, which itself is a complicated topic. To begin, you also need to think about it in an economic sense. What is providing the service costing your company? Your price should never drop below that as a starting point. For my hardware based business, I have fixed costs to procure the item, and service it. Additionally I have hourly HR and other costs built into the running the business. When pricing I try to determine what would be the minimum I can charge to cover our costs and continue to exist. It's a hard thing to determine. I think competitors pricing can also be a good starting point. You can also use new customer on boarding to test different offering to get you that customer feedback on how they are viewing your service (just a data point) Additionally you must know what type of product and signal you want to send into the market. For example if you want to be a luxury type service or item, then you need to have that luxury price... and can't feel bad about it. There will always be complaints your price is too high, and it is always easier to reduce the price than raise it! Hope there is some value in that ramble!
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Alexis Khvatov
It may seem daunting to figure out the value of your product, but if you want to maximize your profits, it's seriously essential to pause for a minute and calculate the value. When assigning a number to something intangible like a brand or an idea, it does take some creativity. Consider what different components increase the desirability for customers — is it based on design? Quality? Versatility? Or does it depend on unique features that no one else can offer? Once you know what factors play into pricing your product, work backward from the highest price point that you're comfortable with and find ways to bring down expenses - like engaging in cost-effective production processes or finding better resources at lower prices without compromising the quality of your product. Doing some math (yes, really) will help generate the realistic value of your product and keep that cash flow coming!
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