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FACTORS IN PRICING

© Barbara Massie

When setting a price, look at several factors: what the competition charges, what a customer will pay and the cost to produce the item. You might find useful hints in Pricing Policies for New Products. Look at advertising that states prices for items similar to yours. Shop around and look at similar products sold by your competition; scout the competitors' prices. The prices you see will give an indication of the price range within which to set the price for your item.

A slow economy causes customers to look for quality at a good price. Try to keep prices at a reasonable level and your product at a high quality to succeed in business.

What type of customer do you want to attract? Will they be "value" conscious looking for the most their money will buy or "quality" conscious looking for the highest quality possible? Others are status conscious customers, who will pay a higher price because to them, "if something costs more, it must mean that it is better!" Yes, this also means that a low price on an item can cause a customer to think, "I'm not buying that cheap thing." Most people do buy with their emotions.

Another tip: would you rather pay $14.99 or $15.00; $59.99 or $60.00; $99.99 or $100.00? There is a psychology to pricing and pricing at even zero cents is not wise. One penny less than a whole amount "sounds" less expensive.

"Keep a Watchful Eye on Your Pricing" gives more insight into customer shopping.

Many customers are collectors looking for that unique piece to add to the collection at home; a collection that fits an emotional need. Again, they are looking for quality and value that fits with what they are "feeling." The colors of your items can affect the selling price. When you are using "in" colors, the customer is willing to pay more to be current with the trends.

Make any packaging you use as attractive as possible and figure it into your cost. The labels you use, any bags or tissue used to wrap a customer's purchase; these are all expenses that need to be recouped.

Scout suppliers. Get the most of the best quality of supplies and materials you need for your money. Buying in volume generally gives you a price cut; the more you buy, the lower the price. Many wholesalers will sell to you without a high minimum order cost. Read "Supply, demand and prices" to learn more about that factor of pricing.

Use your Resale Tax number to purchase items without paying the sales tax. If you pay sales tax to purchase fabric to make a toy, you have