Pricing For Maximum Profits
By Gauher Chaudhry

There are four key components of the entire marketing process. They are known as the 4 P's of marketing.

They are:

1. Product
2. Production
3. Pricing
4. Promotion

I will touch on the importance of assigning the right price to your product or service. This is one of the most overlooked aspects of marketing.

Choosing the right price for your product or service is very important to help maximize your profit potential. Not only that, but your price can also help people make a judgment about the quality of your product or service

For example, a company such as Rolex sells their watches for thousands of dollars. Often this high price is associated with the prestige of the watch. If they started selling the Rolex watches for only $99, this would dramatically affect the perception people would have of these watches.

On the other hand, if you price your product or service too low, it can give the perception to a customer that your product is cheap and of low quality. This can results in reduced sales.

Most companies use the bottom-up approach to pricing their product or service. This means that they take all the costs associated with the making of the product and then traditionally mark-up the price a certain percent which is the company's profit.

Other factors in determining a price is competition, type of market and overhead costs. some companies deliberately set their prices high to reap large profits. This reduces their sales, but give them less customers to work with.

Other companies deliberately set their prices low (even at a loss sometimes) in order to penetrate the market. They then offer back-end sales to their established customer base.

There are a couple of methods that you can use to determine the best price for your product or service.

The first method to determine your optimal price is by sending out a survey to your present customers. For example, you may be releasing a new ebook and may not have a clue on what to price it at.

But since you have 100 customers who have purchased a previous ebook from your company, you can solicit their opinion on what they think your second ebook should be priced at.

Send them to the sales page for your second ebook and instead of including a price, link to a survey that asks a variety of questions that will help determine the cost of your ebook.

The second method to price your product or service is by testing. You can create up to four or five duplicate sales pages with different prices for your product or service on each page. Advertise each page exactly the same way and view the conversion ratio from visitors to sales.

By looking at which page converts the most visitors, you will be able to determine what the optimal price is that customers will buy your product or service for. However, it is important to make sure that each ad copy is identical to each other for a fair comparison.

From what I have read, the best book on the topic of proper pricing is Ken Evoy's "Make Your Price Sell." Ken covers all the aspects of properly pricing your product or service in a step-by-step manner. This is the only ebook that I have come across that even covers this topic.

Copyright © Gauher Chaudhry, All Rights Reserved.

Gauher Chaudhry is editor of Cool Cash Ezine. You can subscribe by sending an email to subscribe@freecoolcash.com with "sub-art" in the subject. Join Gauher's two-tier affiliate program by promoting his latest book "EZ Money With Ezines." Gauher teaches individuals how to make thousands of dollars in the ezine publishing business! http://www.ezmoneywithezines.com

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