Products &

Services

Name Development
O Product names should:

1. Inform customer about product

2. Convey an image
OQuality
ODetail
OPersonality
3. Show product as part of
particular line/series

Trader Joes Tissue

Selling Strategy
Creating a desirable good
1. Item satisfies/exceeds desired
need
2. Item includes expected
accessories
3. Item results in desire for more
4. Item results in product/brand
loyalty

Pricing Assessment
O Customers perception in terms of price

and value of my product/service

O My price vs. competitors?
O What values and benefits do my customers

get from my product/service?

O Are my prices consistent with those

benefits and values?

Pricing Assessment
O What is the current supply and

demand relationship of my
product/service?
O Am I in an industry where the

demand for my product/service has

a short life cycle, and I need to
cash in quickly?
O Does my product have a

recognizable name and allow me

An Actual Product

Pricing Research
O Is it necessary?
O Helps gain a competitive edge
O Find out competitors price and
your quality in comparison
O How to conduct it?
O Shop the competition
O Trade publications and shows
O Internet

Pricing Research
O Go to the customer
O Give free samples
O Give discounts
O Test with friends/family
O Ask what they would pay

Break Even
O Cost (Expenses)=Income (sales)
O Fixed Costs+(#units X variable costs)=

#Units X price per unit

Or
Fixed Costs/(Unit Selling Price Variable
Costs) = Breakeven Point
THE NUMBER OF UNITS YOU MUST SELL
IN ORDER TO START MAKING MONEY

Craft Show
O A weekend booth at the craft show

costs $400. You are selling rocks that

cost $10 per rock for $15 a piece.
O How many rocks do you need to sell
before you break even?
O $400/ $15-$10=80
O How many rocks before your profit is
equal to your fixed costs?
O $400+$400/$15-$10= 160

Break Even Analysis

O Must know the following:
O Fixed costsnot changing, i.e., rent,

insurance, start up costs, etc.

O Variable costsvaries with each unit
you sell.
See additional slides

Pricing Models
O Other expenses may be incurred;

make sure to add those to the

equation (taxes, shipping costs, etc.)
O Use pricing model for services as
well as products: startup costs, rent,
supplies, etc.
O List every penny spent up front and
figure how much profit you want to
make in a year = accurate pricing

Pricing Checklist
O Have I accurately figured my start up

costs? What are they?

O What is my cost per unit?
O In determining the cost per unit, have

I figured in all money spent including

labor, supplies, packaging, etc.

Pricing Checklist
O How many units can I produce or

services can I provide in a year?

O Do I want to make a profit in the first

year, be content to break even or

lose money?
O If I want to make a profit in the first

year, what is an attainable goal?

Pricing for Services

O Research competition
O Check market; are customers willing

to pay for what you have to offer

O May have to charge less if supply is
great; may charge more if demand is
high.
O Good reputation is important; people
will pay more

Is the Pricing Accurate?

O Keep accurate account of pricing and

affect on sales
O Be prepared to change prices if needed
O Are my products moving or is there more

or less demand than I anticipated based

on research? Could any inequalities
(supply and demand) be resolved by
varying my prices?

Pricing
O Lower prices
O Economic conditions
O Need to generate additional
revenue through higher sales
O May produce product cheaper
O Competitors lower prices
O Temporarily through discounts and
coupons

Pricing
O Raise Prices
O Inflation
O Increased demand for your
product/service which would
require more expenses for your
business
O When you do, explain to
customers why.
O Established name

Lower/Raise Prices
Assessment
O Is current product or services

income insufficient?
O Is economy suffering a downturn or

recession?
O Have any competitors recently

lowered their prices?

Lower/Raise Prices
cont.
O Do prices match quality/value

compared to competition?
O Is my revenue level suffering because

of inflation?
O Is the economy enjoying an upturn or

boom?
O Is my product or industry likely to be

obsolete a year from now?

Bottom Line . . .
O Must know what your expenses

are . . .
O Must know if you want to break even
or make a profit . . .
O Price product/service to cover all
costs

Fun Exercise
O Gather with your team
O Come up with one product or service from

your recent businesses

O Write key factors about your product that
would influence pricing
O Discuss the reasoning behind your
decisions
O Also give approximate percentage each
product is of your total sales
O Focus on your target market