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How to Determine Pricing for your New Product |
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by Barbara Ryan
Congratulations Mom! You’ve taken the first step to building your own home business by choosing a product to sell. Next comes the hardest step for most people, determining your pricing strategy.
Should you keep your prices inline with the competition or should you be slightly lower or higher than them? Visit competitor’s websites and analyze the differences in what they offer from what you will offer.
Some things to consider when determining your pricing:
Production Costs: This also applies to a service business, as your time is included in the production process. How much time does it take you to make the product, 30 minutes? An hour? How much do YOU want to make per hour.
Website and Hosting: If you are going to have a website, you’ll have a monthly fee, as well as the cost of producing a website. Even if you do it yourself, it will take your time and you’ll need to update it constantly to keep it fresh.
Office Expenses: You’ll need a good computer and possibly other equipment such as a scanner and printer. Essential is a backup hard drive to secure your work. And of course, space to do your work, whether it be a desk in a corner of the room with a comfortable chair or a table to spread out your supplies and storage for supplies and paperwork. Will you need a separate phone and or fax line? Mailing supplies add up as well.
Materials: If you are creating a tangible product to sell, you’ll need to stock up on materials in advance.
Marketing Costs: You’ll need to do some advertising to start getting traffic to your website, perhaps in the form of pay per click to start. There are many free advertising options, but some paid advertising is necessary when starting out. If you have a craft business, you may consider attending local craft shows and must consider the expenses of setting up your booth at these shows. You will need business cards as well.
There are lots of little things to consider, and the above list is by no means complete, when determining your pricing strategy. How many orders do you need to break even in a month, to cover your basic costs? Balance this with what else is already available to determine your pricing. In the end, what you need to do is determine a price point that will allow you to earn money and strive for success.
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Barbara Ryan is publisher and co-editor of Mom2Mom Magazine , an online magazine written by moms for moms. Barbara is also owner and designer of Cherish Collages, a custom Photo Collage Design business developed from the love of a digital photography hobby.
Article Source: WAHM Articles
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