Establishing a pricing strategy for a new product or service is an important part of the development process. You should consider pricing the moment you decide to take an idea forward as it will determine how much you can afford to invest in the project.
How to price your new product or service
To set the right price for your product or service, you will need to take the following into account:
- the impact of your new product or service on your entire portfolio
- the analysis of its value - eg the benefits to the customer and the likelihood of them paying the price you want to charge
- the competition and their pricing - is your product or service innovative or are you following a market trend
- the selling channels you want to use - this will affect your promotional spend and distribution costs
- how quickly you want to establish your product or service
- the expected life cycle of your product or service
- how much you will need to charge to cover your costs
Make sure to cost all the materials, other inputs, machinery, processes and administrative time realistically. You will need to research different suppliers and the cost of marketing and distribution.
Strategic pricing can be used to drive sales and regulate demand. See how to price your product or service.
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