Establishing a competitive price for your product remains an important part of any business plan. Strategies call for shopping the competition to gauge how your product stacks up against other like goods. Doing so gives you valuable information to help build a complete picture of what others are charging and what price point your product will sell at in the open market.
Cautions come with competitive shopping. You must understand the many variables associated with comparable goods, including operational costs and manufacturing/production expenses. The initial part is to carefully gauge what your own cost-relating price is (how much it costs to produce the unit). Then when comparison shopping you know what your base cost will be and what you can charge as opposed to others.
Operational costs include the many facets of your operations tied into the cost of doing business. Equipment, facilities, labor and all inputs are a part of this equation. Some comparables, if mass produced, will sell at a far distant price, as materials and labor come at differing price points. But often like products sold regionally will be fair comparisons. Farmers markets are good for comparison shopping for the amount of like goods concentrated in one area. Big box stores, on the contrary, will sell many items with the lowest margins.
Be aware of even slight differences in an item you are comparing. Frills or add-ons will shift price points too. Those with large advertising budgets will build in those costs. But do not be discouraged with comparisons that reflect a wide difference in pricing. Local stores will no doubt have items closer in value and manufacturing to yours. Some producers approach competitors head-on to ask for pricing advice. The feedback may not be everything you want, but sellers are likely to at least entertain an honest discussion.
Make a point to talk with store owners and wholesalers to gauge pricing as well. Be sure they see a sample or prototype of a new product and get an idea of your input costs. Trade organizations and local markets are useful sources of information as well.
Take the time to carefully consider all aspects of your product to come to a pricing conclusion. Having to change prices at a later time can be awkward and time-consuming. Shop smart and you will gain valuable information to help you promote your unique product with the best return on your investment.
The above information is presented for educational purposes and should not be substituted for professional business or legal counseling.