|Question:||How do I determine a price for my product?|
|Answer:||You ask people.|
OK, itís a little more complicated than that. You have to ask the right question in the right way, and you have to know what to do with the answer.
You start with an ďSĒ-shaped curve, the demand curve. Demand for a good or service starts rising slowly. Then, if the product is worthy, you get a sharp ramp upward in sales. Finally, demand levels off at a high level, and you start to get a replacement market. Itís important to understand where your price should be to maximize profit:
-When youíre starting out, you want to price as high as possible.
-In the heart of the market, you want to be competitive.
-When you get to the replacement market, you need to offer a bargain to keep up your market share.
Once you know where your product sits on the demand curve, youíre ready to start the exercise of setting the actual price.
For information on exactly how to do this, please see How to Set a Price