Market survey plays major role in in the price determination of a product. You have to compare and contrast the price of other rival products in the markets. Price fixation is a strategic decision to be made. Wrong prices would affect the growth of the business.
How to Determine Product Selling Price?
- Thread starter Suba
- Start date
You have to understand the different dynamics to pricing your products. You also have to understand your location and tailor your prices to align with the purchasing power of the market there..
Good marketing prices is based on the cost of production and other work in progress cost. At times, customers demand cannot be used to determine your price. Where the goods is exclusively essential, no matter the price you are selling it, customers would buy it. Take for instance, the price of bottles of Coca-Cola.
I agree with you. If the cost of production is high then the price of the product would be pretty much higher and vice versa..
As for what I apply when determining the selling price of a product is to calculate all the costs of making the product divided by the results of the product, later you will find the basic price or minimum price for selling the product. Then, to determine my profit, I usually look at the general prices prevailing in the market. Cost of product sold + profit = actual selling price of the product.
Cost of production play major role in determining the price of such product. And the price inadvertently has indirect variations with the demand of such product. As a business owner, you must look for ways cost of production must be minimumly optimized such that the cost of production is not high.
Also, the expected profit must not be high as well. Remember the customers have substitutes in the markets.
Also, the expected profit must not be high as well. Remember the customers have substitutes in the markets.
You have a very good point! The kind of product that you are selling will determine the selling price.
The kind of product you are selling may dictate the price you will be selling them. Some goods are essential and so must be purchase occasionally. Such goods irrespective of their prices, consumers must buy them unless where such goods have substitutes.
Similarly, some goods are luxurious in nature. Those goods are always sold in high prices. In spite of its high prices, people are still buying them.
