Skip to 0 minutes and 11 secondsWell, how I first priced my products in the leather range is I had a look at my costs. The first is the bottom up cost, which is your materials, labour, and anything else that goes into the making of the product. And the other is your brand alignment, where it actually is priced in the market. So I went about obviously positioning my Diffusion leather range in the marketplace, and it had to be aligned with Scarab Rouge, which is at the high end of the market. So that set the tone for looking at the pricing structure of the entire range.
Skip to 0 minutes and 49 secondsAnd by doing a soft launch, where I invited clients to come and view the range and to buy if they wished, I found that I hit the nail on the head across the board.
Skip to 1 minute and 2 secondsI make a point of reviewing and calculating my pricing at least once every six months. Things that impact, for example, on the bottom up cost, such as increases in labour or an exchange rate fluctuation may impact on the leather, especially from Italy, for example, will have an effect on the price.
Skip to 1 minute and 26 secondsCalculating price for Story Box Library is incredibly complex. We've got a number of different types of subscribers. Within each of those, they all work differently. They're all being accessed by a different number of people. So a family may have two or three children. A school may have anywhere between 30 to 800, 900 kids. And then we have public libraries who have huge populations. And then again, organisations are very different. So not only do we have four different subscription types with different ways of calculating price, but we also have different prices and different structures within those subscription types. So it's really quite complex.
Skip to 2 minutes and 7 secondsI did actually research quite a bit of competition, because I had no idea where to go with my pricing points. So I had to look at what others were doing and therefore, what the market was prepared to pay. I still do it. I still look at streamed products and I still try and assess what they're doing and maybe get some good ideas to help us create our own price points.
Pricing your products and services
Setting the right price for your products and services is paramount to having a successful business. The right price will help retain customers for repeat business and maximise your profits. Pricing that is too high or too low can have a big impact on your business. If the price is too high, you may price yourself out of the market - if it is too low, it means you are being underpaid for your product or services.
Remember you are in business to make a profit. Research can help establish the right price for your product and for potential customers. You need to find the balance - the right price for your customers and your business.
Before making any pricing decisions you need to consider:
- What your competitors charge
- The demand for your product/s or services
- What your customers expect to pay
- Your costs
- Your intended position in the market
Paul has taken into account your advice on types of business structure. He decided that the best business structure for him will be a Sole proprietorship, because it’s the most cost effective. He is now ready to shift his focus to setting his prices.
Let’s hear from our aspiring entrepreneur Paul, as he explains where he got the idea for selling sportswear online and how he might approach his pricing.
“The passion for my business came while I was on the committee of my local football club. I was trying to find a way to save my club and their members money on the purchase of the club uniforms. I stumbled across a few sportswear manufacturing websites and the more I researched these websites the more I thought of not only helping my club with custom sportswear but also starting my own business to earn some extra money on the side.
I knew what my club was paying for their uniforms as well as their off-field sportswear and I enquired with the other clubs as well. Because of my involvement in the club, I was aware of the number of clubs and the teams within the competition.
This meant I knew what the competitors were charging, the demand for the product and what my potential customers were paying
I could now investigate how much the product(s) would cost from the manufacturers I had stumbled across in my research.”
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