How do you price your product?
Watching apple wwdc 2019, and looking at screen holder priced at $999, makes me really curios and want to get different perspectives on how do you come up with your product price?
Below a model i have built to come with the price.
#ask-ih
Pricing is very complicated.
For me, I sell "hardware" products, so there's the reality of actual Cost of Goods (parts, components, materials + labor). I cannot sell my products the same as my COG, and it will be even stupider to sell below COG (I'll be losing money on every sale.) So I have to sell at X multiple times of my COG (the simplest way to markup, just pick a high X number).... and/or find ways to lower my COG (buying parts in bulk/wholesale, finding a different/cheaper supplier, cutting out middlemen, etc.) But there are downsides to this too... buy too much parts (to lower COG) and you'll find alot of your cash is sitting idly in your inventory. You can't pay your bills with inventory.
Then see if you're leaving money on the table. Ideally, price as much as the market will bear. If your product is the only one in the market, then you can price it higher. If you have some brand name recognition/reputation, then there's some premium on that too (or maybe a lot of premium on that, like Apple). If you have competition, or demand has fallen, then you may have to lower prices.
Then, there's the psychology of pricing. For customers, Cheap price == maybe cheap product? Expensive price == maybe better product? So you need to pick your target market and how you want to be known to them... What's your reputation? are you a cheap product, or a premium product? Nothing wrong with either one. You can sell a ton of products at a cheap price, or just sell a smaller volume at a high price. (But it's easier and less work to make the same amount of profit selling at a higher price. But the big question is will your customers bite at the higher price?)
Thank you for the details :) very insightful and i can feel your pain selling physical goods is very hard, specially on small - medium scale. require lots cash and kinda deep pockets while you inventory staying not-moving onsite.
I will start with myself :)
I have recently built dev.me - a collection of productive Tools and APIs.
The way i calculated my pricing was:
My equation was "( Revenue - Total Cost ) * Total Subscription Period " and then i built this model and i am looking at the numbers :) and really not so sure. so whats your opinion?
https://docs.google.com/spreadsheets/d/1Abg0OU4QK3ECcMGnyHzlyGQ2dDxZjKOKNx9sEuAINw4/edit?usp=sharing