How to Price A Product - Planning

There are a considerable number of equally important parts that work hand-in-hand when launching a product to market. However, I would venture to say that pricing is probably THE most vital part in the event you need to succeed in promotion your product. If your product is not priced correctly, it would be very challenging to survive in this competitive marketplace in this economy where cost is scrutinized over ever by buyers and consumers.

As a manufacturer, it is critical that you not only understand the marketplace, but you need to understand how to cost a product to make sure that your product sells, and most importantly that it is PROFITABLE. There is nothing worse than getting your products manufactured and placed at retail and then you find out later that you are actually not making funds...or worse yet, you are losing funds!



This usually happens when a manufacturer doesn't do planning or they don't have a lovely understanding of all costs associated with launching a product.

I would caution you to be very cautious and be prepared so you can properly calculate your costs PRIOR to even manufacturing your product. Knowing your expenses will let you select the profit that you need in order to be sure you make funds.


You may have invented the next great thing but if the numbers don't make sense, it is hard in my view to justify investing in something that is not going to give you the return you need to recoup your investment, stay in business and make money. Your long-term goals may be personal, like changing people's lives with a great product, but your business objective ought to be about making a profit or else you will be out of business.

In my view, you would be better off not producing the product if it turns out that you won't be making a profit. I do know this may sound harsh to some, but let's be actual...you ought to be in business to make money. Unless you have a ton of money to spend, it would be a waste of time, energy and money.

I am by no means proposing that you ought to give up if this happens. If this is the case, return to your product development stage and work along with your manufacturer to figure out if there's methods to cut costs in order to meet your pricing structure requirements. Seek assistance from partners who have the experience and expertise that can help you find feasible solutions that will offer you a successful launch.


There's a selection of things you ought to be aware of before you cost a product to make definite you are well-positioned to become profitable.

So let's discuss planning first & then in another article, I'll go over the costs associated with producing or manufacturing a product. I'll also show you how to actually cost a product & calculate margins.

two. Decide WHERE you require to sell your product & be flexible. Would you like to sell your product to specialty stores, online, catalog, mass or large box chains? Keep in mind that the pricing model that you come up with may dictate the channel. For example, you may require to sell your product to mass chains but your numbers show that you won't be able to sell it to them or you won't make a profit, so you may must sell it to specialty stores (since specialty stores usually cost their products higher than mass chains)...at least in the beginning.

one. Identify your competition. Do as much research as feasible in the beginning to identify products similar to yours so you have an idea how to cost your product & how to stay competitive.

four. Be knowledgeable about every single line item involved when launching a product. The clearer you are about what costs to expect when taking a product to market, the more chances you have of pricing a product that will make you money.

three. Decide HOW you require to sell your product. You need to choose in case you require to sell it direct to consumer (meaning you'll do the selling), or you plan to hire a sales rep or distributor. In case you hire a sales rep or distributor, you'll must account for their commissions in your pricing structure.

five. Work with a great manufacturing partner. Having a nice manufacturer can be a great asset when producing your product. You require somebody who not only meets your pricing requirements but is available to work with you if you are trying to meet definite pricing requirements. Select somebody who is reliable, honest & has your best interest at heart.