When thinking about your price point, consider the costs that goes into making an individual product or service offering. If you are selling at a lower price than it costs to offer your product or service than you’d actually lose money on every sale you make, so the more you sell the more you’d lose! Ouch!
Costs - Include all costs like from materials, what you pay your employees, and the value of your time. Make sure your unit price is more than how much it costs to make one unit of that offering.
Claim to Fame - If you are offering a premium or luxury feature, then it makes sense to charge more than average, but otherwise, you might scare customers away with a big price tag.
Competitors - Understand what your competitors charge and whether it makes sense to charge more or less for a similar offering.
Sometimes, you may hear complicated buzzwords, like ROI (Return On Investment), but they’re just used to explain pretty straightforward concepts like how much value you get out of what you put in. You want to make sure you’re running a profitable business, so you’d want each sale to bring in more money than it costs for you to make the sale. Get the low-down on financial buzzwords here.
BREAK EVEN: How much revenue do you need to not incur a loss?
At this point your revenue equals your costs
SALES GOAL: How many units of products or services do you need to sell at its price to hit that target break-even number?
Is this a realistic number?
What are your goals for the month, one quarter, and one year?
REVENUE: You can find the revenue by multiplying how much you can sell with the price of what you’re selling.
You want your revenue to be greater than your costs
PROFIT: The remaining money you have after subtracting costs from your revenues in your profit!
Use profits to reinvest into your offering so that it can continue to grow