How to Set (and Get) the Right Prices

Can you think of a product feature that the buyer will definitely ask you, irrespective of the type of product you are selling?? Yes it is a common feature to any kind of product under the sun...

Its the PRICE of the product!!!!!

But it is seen that most businesses spend very less time in setting the price.

Consider the example of a branded biscuit which comes with airtight pack and a small toy for rs.10, whereas a local brand may offer its product for rs.7. A price sensitive customer will chose the less costlier one. But price is not the end of all. The product should be capable enough to deliver promises that it has with the price.

Each time a buyer choses a product, they match up a price with its promises.

So its vital for a marketer of small business to understand price and promises of the product or service offered.

Especially in the Indian scenario, people are not only price sensitive but also value sensitive. An average Indian buyer will not mind spending a penny more if he feels that you product offers him the right value for the price.


Below are some examples of value factors that go into a product’s or a service’s price:

For a product:

• Quality of the raw materials
• Finished product performance
• Packaging
• On-time delivery
• After-sale service

The quality of raw materials plays a big role in pricing, the higher the quality , higher the price can be marked. Same applies to the other factors too. Like a product that is performing very well and which has a high quality and attractive package with on time sales and prompt after sales service can demand high price in the market. Hence the more your product offers in terms of what the customer perceives to bring value to him, the more price the product can hold.

For a service:

• Experience level of the service provider
• Bottom-line impact of the final deliverable
• Appearance of the service provider
• Turnaround time on phone calls/emails
• Ability to meet deadlines

The same rules that applies to products also applies to services but in different form of promises. A customer will ask for a service from an experienced provider, turnaround, waiting time, perception, commitment from the service. If the service is able to meet the requirements it will definitely fetch high price.

PRICING MISTAKES

Setting a low price initially and them thinkin of increasing the price once the product/ service stabilises in the market is the worst mistak an marketer can do ever. 

Price the product higher if you have a dilemma to choose between prices.