Effective pricing strategies

Pricing is a combination of art and science. Here are some basic considerations and approaches:

1. Don't low-ball your pricing. Know your real costs, including marketing and administration, and make sure you make an acceptable profit after any supply chain costs.

2. Find out how others are pricing their products by asking peers, your trade association, or conducting online research.

3. Recognize that most pricing is influenced by competition, positioning, etc. You really can't go way over these standard prices unless you offer some valuable additional benefits.
This is highly recommended. Add value so you can maximize your profit margin.

5. Remember that pricing strategy is about more than revenue. The original Pillsbury cake mix failed at 10 cents a package (in the early 1950s) and then became an instant success just a year later when it was introduced at 25 cents per package. When it was too cheap, people didn't believe it was any good.

6. Conduct surveys with potential customers to see how they react to your pricing before you go final. Test different price points to optimize the price/volume/profit equation.