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How To Correctly Price Your Product

Business

Pricing is one of the things that determine the success of your business. If you want to be clear about what you want to achieve, then it is high time you came up with a good pricing strategy. The main reason why you are doing business is to make money. Therefore, you cannot afford to choose a wrong pricing strategy. The worst mistake that you can make is to believe that the price you are going to choose will drive your sales. In fact, the ability of selling your products is what will drive your sales. Therefore, it is wise to hire the right people to help you when it comes to marketing, while simultaneously adopting the best pricing strategies.


Underpricing

Canon T3i is among the most underpriced products in the world. Under pricing greatly affected the profit made by the manufacturer. Although there are very many investors who believe that this is the best step when the economy is down, this is not always the case. When pricing your products you need to know that accuracy is very important in any economic cycle.

Many investors tend to underprice their products in attempt to convince buyers that they are selling inexpensive products.

Remember that every consumer wants to believe that he or she is getting the worth of his or her money hence you need to take care of all the costs when it comes to pricing products.

Overpricing

A good example of overpriced products is the 1963 Pontiac Catalina – $ 48,000. Many people thought that the high price of this vehicle was a result of clerical error but it was never the case. Although it is a rare muscle car, the price is too high. Overpricing of this product had detrimental effects on buyers especially those who look at the products from competitors.

When you price your products beyond the desire of your consumers, you will reduce your sales. Consumers will think that you want to cover the expenses of your employees by overpricing.

A FEW SIMPLE STEPS

There are different methods you can use when it comes to pricing your products. To be very successful, you should combine different tools and understand that the main factor you need to take into account is your customer. The more you understand your customer needs, the better you will be positioned to offer them with the value of their money. Here are tips on how to price your products.

Step 1 - Understand Your Customer Needs

You need to do plenty of market research before deciding on the price of your products. This research can range from sending an email and conducting informal surveys. If you do not have money to spend on market research, simply look at various groups. You need to figure out the segment you are targeting as well as pricing before making your final decision.

Step 2 - Understand Your Costs

One of the fundamental tenets when it comes to product pricing is to understand your costs. You should cover all the expenses and then factor in the amount of profit you are likely to get at the end of the day. In addition, you should know how much you need to mark up your products and the price you should sell them in order to make more profits. The cost of the product is often higher than the literal cost of the item because includes the overhead costs of the same product.

The overhead costs of your products can include fixed and variable costs such as shipping as well as stocking fees among others. It is good to include all these cost when coming up with prices for your products. Failing to take into account all these factors is likely to lead to underpricing of your products, which will affect your sales.

Step 3 - Revenue Target

How much revenue do you want? You need to know your revenue target when producing, marketing and selling different products. Targeting your revenue can be very complex especially when you are dealing in a wide range of products. Start by estimating the number of units you wish to sell before the end of the day.

Divide your target revenue with the sum of units you are expecting to sell and you know the price that you should sell in order to attain your profit goals. In case you are dealing in different products, you should allocate the overall revenue you are targeting by the each of the products.

Step 4 - Competition

It is very helpful to a look at your competitors when pricing your products. After all, your customers will compare your price to that of your competitors before making their purchases. Find out whether the products are sold at prices comparable to yours. Only set higher prices if your products are highly priced when compared to those sold by similar vendors. It can be worthwhile to undertake a head to head comparison of different products with those of your competitors. While doing so, ensure that you use the net prices for accurate results.

Step 5 - Direction of the Market

Keeping track of the market direction will help you to determine the demand of your products. You should look at the long-term weather patterns and laws of the country, among other factors, before fixing the price of your products. In addition, you need to understand that your competitors are likely to respond to your prices by introducing new products to the market.

Raising and Lowering of Product Prices

When to raise Prices: It is wise to test new prices, offers, and combinations of these to help sell more products at better prices. You can raise your prices and then offer special customer service or unique bonuses to boost your sales. Ensure that you measure the decrease or increase in the amount of products you are going to sell as well as the gross profit. The best way to find out whether you have priced your products correctly is by looking at the sales volume.

When to Lower Prices: You are likely to miss your target audience by overpricing your products. You can decide to include discounts or give your customers free products to increase the volume of your sales.

This article was first published on StartUp Mindset.

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Politics

Do 2020 Presidential Candidates Still Have Rules to Play By?

Not too many years ago, my advice to political candidates would have been pretty simple: "Don't do or say anything stupid." But the last few elections have rendered that advice outdated.


When Barack Obama referred to his grandmother as a "typical white woman" during the 2008 campaign, for example, many people thought it would cost him the election -- and once upon a time, it probably would have. But his supporters were focused on the values and positions he professed, and they weren't going to let one unwise comment distract them. Candidate Obama didn't even get much pushback for saying, "We're five days away from fundamentally transforming the United States of America." That statement should have given even his most ardent supporters pause, but it didn't. It was in line with everything Obama had previously said, and it was what his supporters wanted to hear.

2016: What rules?

Fast forward to 2016, and Donald Trump didn't just ignore traditional norms, he almost seemed to relish violating them. Who would have ever dreamed we'd elect a man who talked openly about grabbing women by the **** and who was constantly blasting out crazy-sounding Tweets? But Trump did get elected. Why? Some people believe it was because Americans finally felt like they had permission to show their bigotry. Others think Obama had pushed things so far to the left that right-wing voters were more interested in dragging public policy back toward the middle than in what Trump was Tweeting.

Another theory is that Trump's lewd, crude, and socially unacceptable behavior was deliberately designed to make Democrats feel comfortable campaigning on policies that were far further to the left than they ever would have attempted before. Why? Because they were sure America would never elect someone who acted like Trump. If that theory is right, and Democrats took the bait, Trump's "digital policies" served him well.

And although Trump's brash style drew the most handlines, he wasn't the only one who seemed to have forgotten the, "Don't do or say anything stupid," rule. Hillary Clinton also made news when she made a "basket of deplorables" comment at a private fundraiser, but it leaked out, and it dogged her for the rest of the election cycle.

And that's where we need to start our discussion. Now that all the old rules about candidate behavior have been blown away, do presidential candidates even need digital policies?

Yes, they do. More than ever, in my opinion. Let me tell you why.

Digital policies for 2020 and beyond

While the 2016 election tossed traditional rules about political campaigns to the trash heap, that doesn't mean you can do anything you want. Even if it's just for the sake of consistency, candidates need digital policies for their own campaigns, regardless of what anybody else is doing. Here are some important things to consider.

Align your digital policies with your campaign strategy

Aside from all the accompanying bells and whistles, why do you want to be president? What ideological beliefs are driving you? If you were to become president, what would you want your legacy to be? Once you've answered those questions honestly, you can develop your campaign strategy. Only then can you develop digital policies that are in alignment with the overall purpose -- the "Why?" -- of your campaign:

  • If part of your campaign strategy, for example, is to position yourself as someone who's above the fray of the nastiness of modern politics, then one of your digital policies should be that your campaign will never post or share anything that attacks another candidate on a personal level. Attacks will be targeted only at the policy level.
  • While it's not something I would recommend, if your campaign strategy is to depict the other side as "deplorables," then one of your digital policies should be to post and share every post, meme, image, etc. that supports your claim.
  • If a central piece of your platform is that detaining would-be refugees at the border is inhumane, then your digital policies should state that you will never say, post, or share anything that contradicts that belief, even if Trump plans to relocate some of them to your own city. Complaining that such a move would put too big a strain on local resources -- even if true -- would be making an argument for the other side. Don't do it.
  • Don't be too quick to share posts or Tweets from supporters. If it's a text post, read all of it to make sure there's not something in there that would reflect negatively on you. And examine images closely to make sure there's not a small detail that someone may notice.
  • Decide what your campaign's voice and tone will be. When you send out emails asking for donations, will you address the recipient as "friend" and stress the urgency of donating so you can continue to fight for them? Or will you personalize each email and use a more low-key, collaborative approach?

Those are just a few examples. The takeaway is that your online behavior should always support your campaign strategy. While you could probably get away with posting or sharing something that seems mean or "unpresidential," posting something that contradicts who you say you are could be deadly to your campaign. Trust me on this -- if there are inconsistencies, Twitter will find them and broadcast them to the world. And you'll have to waste valuable time, resources, and public trust to explain those inconsistencies away.

Remember that the most common-sense digital policies still apply

The 2016 election didn't abolish all of the rules. Some still apply and should definitely be included in your digital policies:

  1. Claim every domain you can think of that a supporter might type into a search engine. Jeb Bush not claiming www.jebbush.com (the official campaign domain was www.jeb2016.com) was a rookie mistake, and he deserved to have his supporters redirected to Trump's site.
  2. Choose your campaign's Twitter handle wisely. It should be obvious, not clever or cutesy. In addition, consider creating accounts with possible variations of the Twitter handle you chose so that no one else can use them.
  3. Give the same care to selecting hashtags. When considering a hashtag, conduct a search to understand its current use -- it might not be what you think! When making up new hashtags, try to avoid anything that could be hijacked for a different purpose -- one that might end up embarrassing you.
  4. Make sure that anyone authorized to Tweet, post, etc., on your behalf has a copy of your digital policies and understands the reasons behind them. (People are more likely to follow a rule if they understand why it's important.)
  5. Decide what you'll do if you make an online faux pas that starts a firestorm. What's your emergency plan?
  6. Consider sending an email to supporters who sign up on your website, thanking them for their support and suggesting ways (based on digital policies) they can help your messaging efforts. If you let them know how they can best help you, most should be happy to comply. It's a small ask that could prevent you from having to publicly disavow an ardent supporter.
  7. Make sure you're compliant with all applicable regulations: campaign finance, accessibility, privacy, etc. Adopt a double opt-in policy, so that users who sign up for your newsletter or email list through your website have to confirm by clicking on a link in an email. (And make sure your email template provides an easy way for people to unsubscribe.)
  8. Few people thought 2016 would end the way it did. And there's no way to predict quite yet what forces will shape the 2020 election. Careful tracking of your messaging (likes, shares, comments, etc.) will tell you if you're on track or if public opinion has shifted yet again. If so, your messaging needs to shift with it. Ideally, one person should be responsible for monitoring reaction to the campaign's messaging and for raising a red flag if reactions aren't what was expected.

Thankfully, the world hasn't completely lost its marbles

Whatever the outcome of the election may be, candidates now face a situation where long-standing rules of behavior no longer apply. You now have to make your own rules -- your own digital policies. You can't make assumptions about what the voting public will or won't accept. You can't assume that "They'll never vote for someone who acts like that"; neither can you assume, "Oh, I can get away with that, too." So do it right from the beginning. Because in this election, I predict that sound digital policies combined with authenticity will be your best friend.