Pricing your product

- Pricing is one of the most critical decisions…you're going to have to make,…and your business plan needs to spell out…your pricing model as clearly as possible.…You need to understand even a one percent…differential on pricing can have a disproportionate…impact on your total profitability.…Let's assume your business has a 10% profit margin.…If you raise prices by just 1% on the top line for revenue,…you've increased your profitability by 10%.…

That 1% will go from your revenue line…all the way to the bottom,…and your pricing will drive margin from 10% to 11.…Pricing is huge.…Do not underinvest in thinking about it.…So, how do you come out with your pricing?…Benchmark some of your competitors,…look at their pricing model as well as their price points,…and use those price points as anchors for pricing…your own service.…Also, determine you pricing model…and the rational behind it.…

Are you going to sell on a cost plus basis?…Are you going to sell on a value basis?…Is going to be a one time fee,…or ongoing fees?…Or some combination thereof?…