product, valueI’m just finishing a web development product that I’m convinced it’s a good tool and I could sell it.
What I did so far: I’m currently putting it on Mashape (a marketplace for this type of product), searched for similar products and estimated a price based on my costs.
What more I need to think? What factors count when I’m setting a value on my product? Where can I show my work?
Thank you for the attention!
There are basically three ways to price a product:
cost-plus: your costs plus margin = price.
market: market price (“we usually pay X for this”) = your price give or take.
value: you deliver X worth of value. Y = your cost, for (X-Y) profit.
You definitely want to avoid 2) as it’s a recipe to be competed to death on price. 1) works. But you ideally want to fit in 3). It’s easier said than done, of course, but that’s where the actual money is.
Two answers to mostly unrelated questions with a few pointers on how:
The most basic way to set pricing on product or service:
cost < price < value
When value is greater than the price, its good decision for your customer to buy it. When cost of providing that service is less than price you’re asking, you are making good ( profitable ) business.
As in software cases like yours, focus on value you are creating. If your customer can save 1000 / make additional 1000 dollars a year, it would make sense for him to pay 500 for it.
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