Pricing Strategy To Increase Startup Value

pricing strategy

When you make a product, do you want your consumer to be satisfied because of your quality or because it’s cheap?

The word cheap has two meanings. It can mean a lower price, but it can also mean poorly made. There’s a reason people associate cheaply priced products with cheaply made ones. Built into the higher price of a product is the assumption that it’s of higher value.

Pricing Strategy

1. Cost Plus Pricing Strategy

Cost Plus pricing this method is determining selling price of the product by calculate all of the cost, and the value of the margin. I will give you an example, let’s say you running a service business, then calculate all the cost side, this is the table:

Let’s say you are running a small business service and assume you have 5 employees, and each employee costs 15$/hour and in a week they work for 40 hours. if they work for a month then we have to spend 12$. When Your office is still renting, the rental price per year is 6.000$, if per month then you need to spend 500$. and to be recognized by people, you spend 2000$ dollars per month to advertise your business. now you know the total cost per month is 14.500 dollars.
If you want get profit 50% from total cost, then you can set your pricing around: 21.750$, and if you want 30% margin you can set 18.850$.

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2. Value Based Pricing

Second pricing strategy is value based pricing. If you may ask about how much you want to profit, you can see from the quality and value of your product or services. In addition, this methods it’s always about the product, and your services. Like in Blankon, because we make sure that our clients not only get the result of the software, but also services we provide. If you can answer this question, then you can mark up the higher profit for your pricing “If people don’t know your product, what suffering will they go through?” .

3. Competition Based Pricing

Competition based pricing strategy, the point is to look the other price from competitor. Then we take price based on the competitor, example the competitor product price is $10, we can set more than $10, same, or less then $10. But with this method, you will follow your competitor, if they lower their price, you will lower your price, if they increase their price, you will also follow them.

Higher prices can be one of the characteristics of a highly valued company, but that doesn’t mean that if you increase your prices, you become a highly valued company. Always remember about the value and quality.

That’s all the 3 ideas I can explain about pricing strategy, hope this will be helpful for you and read another article here.

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