Rules for product pricing you should know about

A new small business, excited to sell its products, may not consider pricing very carefully – it’s just a matter of calculating the costs, placing a profit margin on top of that, and then hoping for the best, isn’t it? No, not at all; pricing your product gets a lot more complicated than that as there are many other factors to consider.

 This is especially important if you’re an Amazon seller, where competition is fierce, and everyone is vying for the coveted Amazon buy box. You need to consider the perceived value by the customer, the competition, and life-cycle of the product, and so on.

Pricing your products is all about making as much profit as you can. Pricing your product is about bringing your goods to the market and understanding your clientele. Here’s how to make them an offer they can’t refuse: rules for product pricing you should know about.

What not to do

Don’t price your product according to the cost – meaning, based on the cost with a percentage of profit added to it. It’s easy, and it might work, but it’s wasting opportunity. Here are some hints:


You may want to hire a professional marketing research agency to help you with this, although it’s not always necessary; sometimes all you have to do is listen carefully to what your customers have to say. Question them and listen carefully, and find out where the real value of your product is in the mind of the consumer. It’s not just a good way to get information, it’s a good sales technique, too.


You are sure to have competition, so get to know them, get to know their products, and make sure you know what they are up to. Compare your product and the one from the competition, and see how they stack up not just in quality, but in value and pricing as well.


This is very hard for people to do. Either you are going to judge your own product as inferior and price it too low, or judge it as superior and price it too high. Brutal honesty when it comes to your own work is hard to accomplish, so it’s better to get it from another source. However, you’ll need this honesty – you’ll need to understand the value your product brings.

Not pricing your product the proper way – not being able to make the most of it – hampers your development as an entrepreneur in two main ways. First of all, you miss out on a great opportunity to make the maximum amount of profit, which ultimately hampers growth.

Secondly, you tend to send the wrong message to your customer base, or worse, end up with a customer base you didn’t prepare for. Proper pricing is about seeing opportunity and grabbing it. It’s about daring to win.

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