Getting your prices right is essential. If they're too high, you'll put off potential customers. Aim too low and you'll throw away potential profit and risk making customers believe your products or services are inferior as higher priced competitor goods.
You need to set an ‘optimum' price, which allows you to maximise profit after your costs have been paid.
Having sound knowledge of your market potential customers and competitors is essential when setting prices.
You need to know how much potential customers are prepared to pay for your products or services. If they already buy similar products from someone else, find out why and how much they spend.
Also find out how much your competitors charge, but never simply match a price unless you know you can afford to. A competitor could have lower overheads than you. Conversely, if you're confident you're offering better quality or additional benefits, customers might willingly pay more.
To learn more about Pricing Strategies - cost-plus pricing, value-based pricing,VAT and calculating a breakeven figure visit the Start-Up Donut Pricing Pages.