A Guide to Costing and Pricing a Product or Service
- Price: £3.60
- Published: December 2016
- Type: Business Information Factsheet
- Format: PDF
Setting the right price for a new product or service can be one of the hardest tasks faced by small business owners. Costing a product or service is relatively straightforward, but pricing is essentially set by the marketplace.
The price of a product or service needs to cover all the costs and allow for a profit, but it must also take account of what competitors are charging and how much customers will be prepared to pay. Setting too high a price can lead to lost sales. Setting too low a price will reduce profits and possibly result in the business failing.
It is important to understand the impact of pricing on profitability and be able to choose the best pricing strategy for a business. This factsheet outlines some of the costing and pricing issues that should be considered and looks at alternative pricing strategies that can be used.