Understanding the deciding factor in determining the selling price is done if you have matured in determining the product or service sold. see tips on determining the following selling price.
The selling price of a product or service can not be as much as you want to create as high as possible because tempted to get the profit as big as possible, or vice versa you want to give the lowest possible price, with the aim that more sold. It can not be denied, the selling price of goods or services plays a very important role for the advancement of your business. Therefore, in determining a selling price you should think really before taking a decision.
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In the sciences of Administration, profits can be translated as 'the difference between the sale price minus the production price' (wikipedia). But that does not mean in order to pursue great profits alone, you so forget the quality and other aspects of the product you offer. That is why setting the selling price of a product / service becomes a risky thing because it is like having 'two sides of the blade'. On the one hand if the price is too high (expensive) you could be a loss because of the lack of consumer purchasing power. While on the other hand, if the selling price is too low (cheap) means the profit is not too large and even this could trigger a loss in the future. Both can have an impact on losses due to errors in the sale price.
Therefore, to avoid losses in your business, you better prepare carefully the price of the desired sale by taking into account several determinants in determining the selling price below:
Tips on Determining Selling Price
1. Decide in advance the amount of profit you want
Often you think too much about the cost of production regardless of how much business profit you want to get. This is what sometimes makes the beginner must suffer a big loss in starting a business. Therefore, before determining the selling price of a product, make sure that you have determined the amount of profit desired, so that in the future you can also enjoy the benefits of the business you run
2. Adjust to the ability of consumers
Adjust the selling price with the purchasing power of consumers who become the target market of products / services that you produce. If you are aiming for lower class customers, then the selection of low prices is a top priority that you need to pay attention to. Whereas if you are targeting upper class consumers, generally their main trend is the quality of the product you offer compared with the price. For that, it helps you do a small market survey to observe the capabilities of consumers you want to shoot.
3. Consider production costs
What is meant by production costs here are the invisible costs, such as the cost of renting a place, transportation costs, promotional costs (internet, brochure printing, etc.), and other operational costs arising from the business you are running. Calculate these components into your price 'formulation' so that all things can be fairly represented.
4. Pay attention to competitors' selling price
As a beginner, of course you should know the market price of goods / services of the kind offered by competitors. Sometimes competitors become a fairly effective measuring tool to determine the selling price of the product. If the product you offer has a higher selling value, then there is no harm if you market the product with a higher price than competitors, and vice versa.
5. Keep an eye on price movements on the market
If the business has been running, it does not mean the job of determining the selling price has been completed. For those of you who have a culinary business, for example, there are times when the prices of basic commodities such as beef, chicken meat, flour, chili, eggs, etc. have a very significant increase. This is where it takes your foresight as a businessman to get around the spike in the prices of these basic necessities. If the condition can still be maintained, reducing the portion of the food could be an option. But if it is very beyond the fairness, then raise the sale price to be the last alternative that you can choose. Therefore, monitoring the price fluctuations of your basic business needs are very necessary for the stability of your selling price can be maintained.