How to Price Your Product: What You Need to Know About Pricing Before You Launch - Expand Cart
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How to Price Your Product: What You Need to Know About Pricing Before You Launch


The Initial Obstacle

Your store’s creation and obtaining your products may have been smooth sailing until now, but once you start thinking about pricing your products, you’ll probably freeze for a bit. Pricing is one of the essential pillars of any store in the world; it’s tangible with everything that has to do with your business, from investments to workers’ wages. You need to assess your product on more than one layer; one-time purchase, very specific niche, seasonal or trending product. You don’t really have to overwhelm yourself thinking that it’s a one-time thing that ties you down. A product’s price can always change after launch and some strategic marketing ploys play it to their advantage to get the word out by introducing a very low price that gradually rises after creating a formidable customer base.

You need to establish that your product’s price is what keeps your business afloat. A low price that is cutting deeply into your profit margin is going to make its sale unsustainable while hindering your chances for growth by absorbing resources unnecessarily. Your competitor’s price is also another complex situation where you’re forced to remain within the boundaries set by the market. These worries are important to help guide your price establishment but they’re not the main pillars that formulate your price.


Variable Costs

This is one of the most intuitive steps in understanding the basics of pricing your products, essentially, it’s a breakdown of all the costs involved in getting your product on a shelf or even in front of a door. If your business model is simply the order of products from third-parties and then reselling it at a price that ensures you have a good profit margin, then you won’t have to dig too deep in understanding the mechanics of pricing a product from a manufacturer’s point of view. Making your own products means that you’re using raw materials, which costs. You’ll need to group the raw material you use and try to get an accurate estimate of how much raw material creates how many products; called the cost of goods sold per product.

The raw material is one thing; the time you spend on the conversion process is another. You’ll have to put a price on the time you spent making the product. The cost of your time is up to you and it can be variable but be sure to incorporate it into your list of costs like cost of raw materials, packaging, promotions, packing, and shipping. You can even set an hourly rate of the profit you’re expecting to earn and distribute it on the number of products you can make to find the best price.


Profit Margin

Once you know the exact range of variable costs of producing your products on more than one timeline, you should move on to integrating profit in your prices. Don’t forget that whatever industry you’re operating within, the market also has a say in determining your price. The profit margin isn’t usually very high at first because the market would find it difficult to accept it if you’re products cost twice as much as your competitors’. Even if you promise substantial-quality, a very high launching price can damage you unless you’re in an obscure niche market. To obtain the price after deciding on a profit percentage, simply add the percentage on top of your variable costs.


Fixed Costs

While variable costs are very important in determining your product’s price, fixed costs can’t be ignored. These costs are almost constant whether you’re mass-producing or producing it per order. Fixed costs have to be included in your plan and should be paid by your sales. You’ll have to think about how many products you need to sell it to break even and start making a profit while including fixed costs in your calculations. This should help find a great balance between making a profit and staying competitive in the market.



It’s natural to take a lot of time deciding on your launching price, but don’t let them make you too hesitant to see the big picture. Your calculated price for launching isn’t going to be a constant price, it’s specifically made to evolve along with your shop. Once you make sure you got the essential formula of your pricing which covers both your expenses and profit margin, it’s time to see how it works with the market. This strategy is considered a win-win because if it works and you sell a lot of your product then your pricing scheme was great, but if it fails to deliver what you were expecting, then you can readjust and customize it to fit with the feedback of your customers and the overall pulse of the market.


Customer Research

This step shouldn’t be taken only after launch. Try your best to gather information from customers on what they really want and the prices they find fair and the prices that they are repulsed from. You can use emails to ask your existing customers about their opinion and whether they find something wrong with the price and why. Market research is a bit costly, especially when you’re still launching your online store. Try to stick to social media and surveys to get a good feel for how your target audience feels about your prices and perhaps adjust them accordingly if you can while still maintaining a profit. Sometimes reducing your price can exponentially increase the number of sales so always try to find a balance.


Whichever prices you launch your store with, be confident about your ability to turn the tides if and when the occasion arises. You should indeed worry about calculating the best price for launching your products but you shouldn’t make it a life-or-death matter. Understand that the initial price is bound to change according to numerous factors in your market. The more you relate to your customer’s perspective the more comfortable you’ll be with the price.

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