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Putting a price tag on your personal creation is one of the hardest things you’ll have to do. But when you bring value to the table, people will be willing to pay for it. In order to price your product or service appropriately, you’ll need to identify a few key aspects of what you offer.

The first step to establishing your pricing structure is to specify exactly what you’re selling. It sounds pretty obvious, but this step extends beyond the base product or service and includes extended benefits or perks your customer will enjoy because of the purchase.

For example, if you are selling homemade dog treats, the tangible item is food for a family pet. However, maybe you make every item with all-natural, local, organic and ethically raised products. Or maybe everything is handmade and prepared by teens to provide them with valuable work experience and an opportunity to build employable skills.

How you do things and the specific offerings built into your product or service are important considerations to your pricing model. Both tangible and intangible components are relevant when setting the price for your product or service.

Once you know what you’re selling, think about how deeply your customer needs it. In other words, identify the problem you are solving and how important a solution… or better yet, your solution…is for your customer. In order to do this step properly, you’ll need to make a deliberate effort to get to know your customer and what their needs are. 

  • Who is your ideal customer? 
  • Where do they hang out? 
  • What do they do for work?
  • What do they do for fun?
  • Why do they want or need your product or service?
  • How taxing is their problem, and how valuable is the solution you provide?

After getting up close and personal with your ideal customer, do some market research to see what the going rate is for similar products or services to yours. Compare what your existing competitors offer with what you plan to bring to market, and what their customers have to say about the quality, experience, and access they’ve experienced when purchasing from them. 

Consider some of the differentiating factors that come into play such as cost of materials, your ability to fulfill the value proposition based on what your ideal customer is looking for, or existing products and services that target a specific niche market or need. This process will help build a pricing benchmark based on current offerings, but will also give you insight into the need for your product or service. 

I can’t emphasize enough how critical customer feedback is at this stage, so reach out to people who meet the profile of your ideal customer and ask them pointed questions as you develop the intricacies of your offering. Visit competitor websites to understand what you are up against, and dig through online reviews and forums to see how the existing market feels about similar products and services that are currently available.

Regardless if you develop a high-ticket luxury product or service, or offer a more accessible and affordable business model, you want to make sure your business is oozing with value for your ideal customer. Because when the value you offer outweighs the cost for your customer, it makes the purchase an easy decision for them.  

And because pricing is nuanced, your set price will shift based on market supply and demand. Making it easy for your customer to recognize the value of your product or service and reinforcing it with a price that can be anchored against existing competitors in the market will help your ideal customers recognize that your solution is the right one for them at a price they are willing to pay.

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