Are you selling a product that you think is worth x amount, but when you price it out, your customers don't think they should have to pay that? You're not alone. I've been rejected more than once, trying to sell my products at the price I wanted and thought they were worth. However, through those tough times, I learned that any potential customer is willing to pay for what they want or need. It's up to us entrepreneurs to figure out what that number is. That's what this guide is all about.
Do your research
First, you need to know your customer. Your customers can be either existing or potential customers, but it’s crucial for you to understand the needs and wants of these groups to make sure that your product or service is appealing enough to them.
Next, understand your market by researching competitors' products and services and what they charge for them (competitor analysis). This will give you an idea of how much similar offerings cost elsewhere so that when it comes time to set prices for yours later on down the line—and after analyzing other factors like costs involved in creating/delivering/supporting your offering versus what someone might pay—the figures won't seem completely off base from those within industry norms or typical market values based on similar offerings within various sectors (industry analysis).
Also, review your business model: If there isn't a precedent established yet as far as pricing goes among other companies producing similar products within this industry, then ask yourself whether yours is realistic?
Look at hard data
Your customer is willing to pay for a product they think is worth their money. To figure out what exactly your customers find valuable, you need to look at hard data. This means looking at your own data—from previous products, from similar products and competitors' products, and even surveys among industry experts. You want as much information on the subject as possible so that when it comes time to make decisions about pricing and sales numbers, you'll be able to make an informed choice based on all of this information rather than just one piece of it.
Ask customers how they feel about paying for your product
Once you have a baseline idea of the price range that customers are willing to pay for your product, it's time to ask them what they think about a specific pricing plan. You can do this by asking questions like:
- How much would you be willing to pay for this service?
- Would you consider $X fair?
- Would you consider $Y too high?
- Are you okay with paying a monthly fee, or would it be better if we charged per use and billed at the end of the month?
Use market research software to determine what customers will pay for your product
There are various market research software options that can help you figure out what your customers will pay for your product. These include SurveyMonkey, Google Forms, Typeform, and SurveyGizmo.
If you're launching a new product or service and want to find out how much people would be willing to pay for it before you start building it (or even if you've already launched the product), consider using one of these available tools. By taking advantage of this technology, you'll be able to leverage the knowledge and opinions of potential users without having to spend time or money on building a survey tool yourself.
Once you've gathered enough responses from potential customers (50-100), look at what they said when answering the question above. If most people said they were willing to pay $X/month, then it's safe to say that $X/month is your customer base's most realistic price point.
If there was no clear trend among responses, keep collecting data until there's enough evidence at hand.
Your customers will give you more information than you think if you ask the right questions.
The easiest way to find out what your customers are willing to pay for your product is by asking them.
Seems simple enough, but most companies don't bother. They assume they know what their customers want and how much they're willing to pay for it. But the truth is that you can never really know until you ask them directly—and even then, it's possible that you'll be surprised!
You must get feedback from real people who buy from you in person or online as well as by phone or email (if they've already bought). You can also survey people who have never purchased anything from your company before; this will help identify potential new customers and give them an idea of what's available so they know whether or not they might be interested in buying something later on down the line once they've seen what else is out there (which could include yours).