Pricing introduction

Lesson Details:

Video Transcription: In this video let's talk about how to set your initial product price and how to evolve that price this video is brought to you by Appy Pie’s Academy because the price can change and there's only so much theory that you can guess and apply to the pricing but that's imperfect some of the process is actually in the real world and we're going to talk about that in this video so first thing you want to do is understand what the market rate is for most businesses there already is a market and a market rate and for businesses that for entrepreneurs that think that they have not a lot of competition or their product is very innovative find something not that far removed from what you're selling so essentially for all intensive purposes every product or service has a comparative not competitive but comparative service or product and comparative price that's not too far now I'm gonna give you a few ideas of how to massage the price and then I'm gonna give you an idea of how to find the ideal price so how to massage the price if you are new and you're struggling right you have no credibility your competitors have credibility so you so the way you win people over is of course by your differentiation and one of the ways that you differentiate is you of course you can differentiate in many ways but one of the ways is pricing you want to price a little bit cheaper so that people who can't afford your competition will come to you but you don't want to compete on price too much because it will force your competitors to come down and then you'll have to come a little lower down and they'll come down and then everyone loses every business loses customers win because they get the same thing for cheaper but all the businesses lose so you have to do you have to under bid your competitors very responsibly because this can come it's a it's a short term win and it's a long term damage to the whole ecosystem okay if you are a boutique hire and business you can raise whatever that market rate that you found you can raise your price a little bit because your differentiation is compelling in quality you're giving more you're giving something better so you can Rea raise the price a little bit from the market rate.

You can decrease the price if the competition is stuff if it's a very competitive market you you know one of the ways unfortunately is competitive markets the price price competition comes into play so then you lower the price a little bit and conversely if there's a few competitors then you raise the price a good example of this is let's say you're selling t-shirts well if you're selling t-shirts on Amazon you're competing with a whole bunch of other t-shirt retailers but if you're selling t-shirts the same t-shirts but on your website or in person somewhere that's where you're the only one selling it then guess what there's not a lot of other people selling the t-shirts so at least not in the immediate proximity so you can sell them a little bit more expensively because you have no one to undercut you in price and you sort of set the price for that immediate market so these are the ways you increase decrease increase decrease a little bit the price but here's how to really get into the ideal price it's you have to talk to your potential customers new customers and you have to sell sell sell in person you have to talk to people who are making the buying decision and you have to segment out and get to understand the different types of personas who might buy your product for example a book there might be a college student reading a book it might be a senior person reading the same book they're gonna expect different prices they're gonna be different affluent level so you want to understand your marketing channels and you want to talk as much as possible to these people if you can talk in person that's better or over Skype or something like that where you can see their face expressions it's much better because you will be able to determine what's right and wrong in the sales process and you'll be able to fix that and if they're you know cringing on the price then you know for that segment of the population the price is not very good you got to lower the price a little bit because you know you're losing people on the price or you can press on the discounts because that's the way to lower the price without actually lowering the price so you got an experiment by definitely going out and talking to people but also you have to experiment with different prices for your company try different prices when you're new it's much easier to actually change prices of course people who bought something for a more expensive price if they ever see that your price came down they'll get irritated but you have to experiment and experiments work kind of like this most of them won't work most of them won't show any results some of them will lose you money but some of them will show you give you a sense for the right path long term and that right path is worth more than all the little short-term losses so if you lose a little money in the short term that's the cost of experimentation if you're frustrated there's few results that's the cost of experimentation but the experimentation is the only way to get to the ideal price and you should never really ultimately stop come experimenting because you need to refine and refine and refine and refine prices and the more you refine them of course the more you get closer to the ideal price which will help you beat competitors it will help you convert more customers and of course every converted customer has the potential to have a lifetime additional value so a good entry price that's also good for you in terms of profitability is something that you number one talk to potential customers number two relentlessly experiment in the real world