Pricing is both an art as well as science as we discussed in earlier post on Ten Commandments of pricing. There is no one right way to determine the price of products or services you are selling. To a large extent, the price is based on the value customers perceive to get from the product and what they are willing to pay for it.
The law of pricing says that you should charge each customer the exact amount he/she is willing to pay for it for maximum profit. This is how auction system works. You let each customers announce how much he wants to pay and pick the highest bid. While it would be ideal to determine the price in this fashion, in practice it becomes a challenge to sell your products this way. That’s why it is necessary for business owners to come up with an advertised price and augment it with other ways such as coupons to attract more customers.
So what factors do you need to consider when pricing your products and services?
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