How to determine the retail price level

An effective pricing policy is a necessary element of a successful enterprise. The correct definition of retail prices helps to ensure the necessary sales volume and achieve a level of profitability.

Instruction manual

1

First, determine what price the buyer considers appropriate for the product being studied. At the same time, consider not only the same products, but also products that are analogues of yours. Gather all available pricing information and analyze it. You may encounter difficulty if you turn to products and services for industrial purposes, since in this case actual prices and tariffs may be higher or lower than the list prices, and in most cases you will not know about this in any way.

2

Write down all the parameters that distinguish your product from similar and alternative products. Include such items as the main property, reliability, additional properties, maintenance and commissioning costs. Make a comparative assessment of the values ​​of these parameters for different products and find the difference with yours. Thus, you will analyze how competitive your product is in quality, and highlight its main advantages and disadvantages.

3

Find the value of the differences in the parameters of your and alternative products for consumers. If the product does not represent value to the person, he will not purchase it. For each property, the profitability for the buyer will be different. Think about whether your target audience is willing to pay more money for improved options, and if so, how much more. There is always a danger that part of your potential or existing customers will be attracted by lower prices of competitors for lower quality goods. Thanks to this study, you will determine how valuable the benefits of this product are to consumers.

4

Add to the price of an alternative product the value of the differences from your product. So you will receive the level of economic value of your products, that is, you will find out how much consumers are willing to pay for your product, given its unique properties. Focus on this indicator when calculating the price of goods. Depending on your goals, objectives and strategy, the cost of the product may be higher or lower than economic value.