Pricing Tips from Hiruy Amanuel that All Entrepreneurs Should Know

Putting a price tag on your new product or service is like quantifying all your hard work and vision. Often, entrepreneurs will think the best price point is the one that makes their offering attainable for their target market. But there is more to it than that, which is why Hiruy Amanuel shares his seven pricing tips to help startups offer their products effectively.

1. Go Over the 3 Cs

Customers are not the only “C” you need to keep in mind for pricing. You also should consider your costs and your competition. By combining details from these three “Cs,” you’re more likely to get a price point that accurately reflects your product. If you only focus on one or two of the “Cs,” you’re missing a big part of the pricing puzzle.

2. Allow for Adjustments

An important aspect to keep in mind with pricing is that it isn’t set in stone — you can change it! Not only can you offer special deals to certain groups or at specific times, but you can also change the standard price of your product if you deem it necessary.

3. Price vs. Value

We usually think of these two terms as the same thing, but they aren’t. You may place more value on your product than a potential customer, but that doesn’t mean your price has to reflect that. You have to find a balance between what the perceived value is and what the price should be for it.

4. Verify, Then Increase

A great way to test the pricing waters is to set a price and make three sales at a minimum. Once that happens, increase your rate a bit and try to make three more sales. If you quickly do so, increase the rate again. You can continue to do this until you see a plateau.

5. Your Pricing Is Not Your Worth

The product or service you’ve created feels like a part of who you are as an individual, so it’s hard to separate yourself from it. However, the price of your product is not the same as your worth as a businessperson. Always keep the two separate in your mind.

6. The 50% Rule

You want to target a gross margin of 50% on the costs of your product or service. Any less than this, and you’ll wind up with such little profit that you won’t be able to expand. Also, make sure you’re getting paid within terms — if not, your business will end up more like a short-term hobby.

7. Crowdsource for Insight

You don’t want to get pricing feedback from just anyone, but getting input from those whom you trust can assist you in determining if your price point is reasonable. You can also ask them what they find valuable about your goods or service to know which aspects of your offering to keep. Just remember not to take their insights too personally, even though it will be challenging not to!

About Hiruy Amanuel

Hiruy Amanuel is an expert on technology and a devoted philanthropist. Throughout the Horn of Africa, he has invested in numerous educational and technological initiatives. He forecasts the rapid development of groundbreaking technologies throughout the region as access to quality education and technology increases.