Determining a price for your product is an important step when coming up with a marketing plan. If the price is set too low your company will have a hard time making a profit. A price that is set to high could encourage competition, which could hinder the success of your company.
Pricing the Product
To get an idea of how you should price your product there needs to be frequent checks made of your competition and how they are pricing their product. By doing this you will be able to create a history of pricing so you can determine if there are any trends. Having a good history of your competitors pricing will let you know if they change the price at certain times of the year in an effort to boost their sales. This will let you counter their pricing with your own prices keeping you competitive at all times. By looking at your competition, it will help you see supply and demand trends that will help you set a competitive price that will ensure your company the best chance to turn a profit.
Is Your Product Elastic?
Having a good history of pricing will let you know if your product is price elastic. Your product is considered price elastic if the price of the product is raised and the demand for the product decreases. The same is true if the price of the product is lowered and demand for the product goes up. A good source for this information is the surveys that you have completed or from focus groups that you have had done to gauge consumer opinion. Your research should let you know how elastic your product is, and the elasticity of your industry.