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How do I develop a product pricing strategy?
A member of our Advisory Board, founder of the House of Tara and proprietor of the first make-up school in Nigeria,
, answers this week’s question:
There is no clear-cut rule on pricing. There are, however, factors to be considered when creating a pricing strategy. These include:
Cost of the product (actual cost of the product, shipping, clearing where necessary)
The premium and perceived value of the product or service
Your intended profit margin
Cost of sales (labor, warehousing, local transportation, marketing)
Price of your competition (do they have similar products? What is it priced at? You don’t want to price yourself out of the market)
After these factors are considered, you can then fix percentages for each unit of item and then you have a pricing strategy. But in all these, it is important that the pricing be fair and ethical and that the customers get value for their money.
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