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Your Marketing Plan Step-by-Step, Page 7

 Step 7. Price

 Where do your customers go to buy?

Setting a price is a critical part of marketing. The purpose of price is to create a set value for a product, idea or service - a value that results in profitable exchange for both the buyer and seller. Value for both buyer and seller is in the perception of a fair deal, a satisfactory, two-way exchange. This value often is measured in money, although a trade or exchange can be for services often referred to as value-added promotions.

Profit is measured in the revenue or cash remaining after all expenses to the buyer have been deducted.

When setting a price for profit, first determine what all the expenses will be. These include labor, inventory, salaries, rent, production, sales, advertising, legal expense, license fees, training, lights, heat, phones, websites - in short, all of the costs of bringing a product to the market.

Next, review your SWOT as price also is determined by what the competition is doing, by your objectives and by any constraints you defined in your SWOT.

Third, estimate the demand by reviewing your opportunities, your objectives and the audience most likely to buy from you and why.

When you price, remember to be flexible. It is easier to go down than to go up. If your price is too high, have a sale.

Don't forget to include the cost of distributors if you are selling wholesale. Check to see how many of each item you need to sell to make a profit. It may be that it's not worth it - and if so, that's ok. You will have saved yourself a lot of agony and money in the end.

Here's an example of how I found out how many books I would have to sell to make any kind of profit:

Book Price: $12.95 (based on extensive review of competition and similar products)

Production cost:     $3.50
Distributor cost:     $7.00
Marketing cost:      $2.00
--------------------------------
Total:                    $12.50

At $.45 per book, I knew I would have to sell a whole lot of books. This was going to have to be a volume business!

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