Pricing can influence whether a consumer purchases a product. Although product price matters to a purchaser, it’s important to the seller as well. It takes a combination of favorable market trends, product quality, consumer liking and product differentiation along with correct pricing to generate sales, which lead to the success of a product. When considering the pricing factor, setting prices too high or too low can affect sales.  Sell value not price.  If you are competing on price alone than you are in the commodity business.  And unless you have deep pockets it is a rough way to compete.  Ask yourself, what is the value of the product you have to the buyer?

How your product is priced will dictate what market you are in.  If it is high priced and you have a luxury brand the stores you will sell to differ from a product that has moderate pricing.  It also will direct the focus of how you communicate your message and where.

How a product is priced relative to its competition will significantly affect it’s marketing plan.  If you are not competitive in you’re pricing that can hurt your sales.  When I was President of Jessica Simpson Coats we found ourselves with prices that were 15-20% higher than the brands we hung with.  While we had good product and a great label it negatively impacted the amount of business we did.  Stores constantly told us that they would increase their business with us if we lowered our prices.  However the owner of the company didn’t want to reduce the prices.  (That’s another story.)

Pricing is a function of your business model.  What it costs to make a product and what your markup needs to be to run your business.  But, without considering how it effects you’re marketing you run the risk of not having a successful business.