To be able to market your business or products successfully, you need to have a good understanding of market trends and consumer behaviours, especially within your target markets.
This information will assist in development of a desirable product, ideal price point, distribution channels and targeted promotional activities. Knowing and understanding key trends and influences in your operating environment can highlight marketing opportunities and potential risks for your business.
Here are some strategies you can use to collect market information:
When you are starting a new business, it can sometimes be hard to turn a profit, and you may even make a loss. It is important to factor in all of your costs into the pricing structure of your products and services, so that you are not left out of pocket.
Before you price your products or services, determine your fixed costs and variable costs. Fixed costs are those that do not change with the amount you sell. For example, things such as power, water and equipment are all fixed costs. Variable costs are the costs of producing your products or services that will change depending on the amount sold or produced. This includes labour, materials and parts.
The following formula will assist you in figuring out a price that will allow you to cover your total costs. If you would like to factor in a profit, you can add a percentage on to the final selling price.
Selling Price = Fixed Costs / Number of sales in given period + Variable costs
Example: Working out the Selling Price
Fixed costs (FC)= $500/month
Variable costs (VC)= $40/t-shirt
Monthly Sales Figures (MSF)
Approximately 25/ month
Estimated Selling Price (ESP)
ESP = (FC /MSF) + VC
ESP = (500/25) + 40
ESP = $60
In this scenario, the manufacturer should sell their products at approximately $60 to make sure they are covering their costs. They may wish to increase this amount if they would like to make a profit.
You can also set prices based upon consumer expectations and average market prices. Researching the price of products in your area of interest will help you to set a price that is reasonable by consumer standards, whilst remaining competitive. Keep an eye out for what other businesses are charging for their products and services and use that as a loose guide for setting your prices.
Consumers often associate the price of a product with its quality. Generally speaking, products or services with a higher price tag than their competitors are perceived to be of higher quality. You may purposefully set higher prices if this is the effect you wish to achieve.
If you are selling a service, you may be able to use the award rate to determine the prices you are going to charge. For the arts industry, you can find award rates on the Media, Entertainment and Arts Alliance website. You may also be able to find award rates through the industry alliance for each artistic discipline.