The Secret to Finding Your Perfect Pricing Strategy
Pricing products can be tricky.
Price them too high, and they won’t sell.
Too low, and you may be leaving money on the table.
So how do you find your pricing sweet spot?
I have a few tips to help you find your perfect pricing strategy, plus a simple formula called “the rule of 3” that is guaranteed to leave money in your pocket.
Here’s the first thing you need to know: do your market research.
Start by looking at planners in the market that are similar to yours. Are you creating a goal planner? A student planner? Using wire-o binding or a binder format? How many pages will your planner have?
Only look for like items that are on the market — everywhere from Amazon to brand websites — and that are similar to what you’re creating. All of these details will factor into your pricing strategy.
Next, factor in the budget of your ideal client.
If your customer is a professional, maybe an executive working for a Fortune 500 company, you might be able to price your product on the higher end to speak to their needs and desires in a planner.
On the other hand, if you’re creating a student planner, you might need to price your planner on the lower end, keeping in mind that students aren’t always working with the highest budget and might need something a little more affordable.
Finally, calculate your expenses as a business owner.
To be honest, this is maybe one of the most important factors to consider when creating your perfect pricing strategy.
Now, you may be familiar with the term, “keystone pricing.” Keystone pricing is a product pricing strategy that is widely used when considering wholesale pricing for your product.
My thoughts? This is a flawed pricing philosophy. It doesn’t always leave money in your pocket at the end of the day, which makes any level of growth that much more difficult as a business owner.
Instead, I like to operate on the rule of three. This strategy relies on your retail price breaking down into three different buckets:
The manufacturing cost
The reprint cost for future runs
Your profit
These three buckets can help determine your exact pricing strategy.
For example, if it costs $15 to manufacture your product, you should aim to price that product in the market at $45 — IF this price fits within your strategy based on your previous market and customer research.
This way, you’ll have $15 to cover your manufacturing cost, $15 to pay for future print runs (so your business can grow!), and $15 profit (money in your pocket!).
What do you do if the rule of three doesn’t work perfectly based on your manufacturing costs?
Still plan to price your product based on your previous market research.
The rule of three might not always work out, especially early in your manufacturing process . . . and that’s OK. Keep in mind that costs change and so will your quantities and overall product offerings.
Alternatively, you can negotiate pricing, seek out a different manufacturer, or look for ways to save on costs for your planner in order to bring your costs down and get to a better place that does allow a little more profit in your pocket.
If you’re ready to start looking into other manufacturing solutions for your product in order to create a more profitable pricing strategy, get in touch with me here to start the conversation.
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