The price of your product is almost always a driver of purchasing behavior. And with price being the number one reason people choose an online marketplace over a retailer, it’s no wonder why finding the perfect price point is essential to any business.
So, what can you do to find that perfect price point? The first step is to conduct market research to determine where your product fits in the current market. After quality market research, you should have a solid idea of where your product fits in the current market and which products represent its biggest competition.
Next, you must calculate the cost of producing your product to determine your profit margin which is a measure of profitability. Your profit margin is essentially your price point minus the total costs of materials, labor and overhead it takes to produce one of your products. Your profit margin typically should be 30% or above. For more information about factors to consider when pricing your product, check out the resource below.