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Guide to setting prices

Aug 12 2005

1. Analyse the position your product holds in the market. Are your target customers those who are looking for reliability? Has your product already achieved an established image in the eyes of the market? Do buyers view it as good quality, prompt service, stylish, say?

2. Analyse your product. Are you planning modifications or alterations which could alter its reputation or relative position in the marketplace?

3. Analyse the competition. How do their products rate against yours? What is the relative price structure in the market?

4. Decide your pricing strategy. Where in the price range are you going to pitch your price? Is it going to be average for the market, 5% less than the average, 5% above the average or a premium price, 25% above the average?

5. Choose some specific prices. Estimate volume of sales, profit margin and costs to forecast the level of profits for each price.

6. Choose your price.

7. Would you be able to test market the price in a small area of your market? This would allow you to gauge customer reactions.

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