Price

There are four main types of price techniques:
1. Penetrating price
2. Perceived value
3. Luxury item
4. Discount price

Penetrating Price

This will be determined by the average or going market price of a similar product or service to yours. You can study your competitors’ price for a comparable product. You will price your product a little bit lower than this price to make an impact or penetrate your market.

An example of when you will use this technique is when you are trying to introduce a new product or service to a fairly saturated and competitive market. The only thing that may set you apart is a slightly lower price.


Perceived Value

This is when you add extra value to your product or service - allowing you to price above the current market value. You are able to do this, because your potential customer will consider that you are giving him extra value because you are giving more than his money’s worth.


Luxury Item

This is an item that you will list at the highest price your market will bear. An example of this will be a commodity that potential buyers will want because they consider it to be an exclusive “must have” product.

If you have the expertise that makes it a goldmine of information, then that will be your luxury selling point. That’s why it’s vital to position yourself as an expert in your industry.

Inventory

When you first start off your business, you will be handling your own inventory on a fairly small basis. You will probably just start by keeping your inventory in an extra room in your house, that is if you have one. As you get bigger, you’ll be buying or renting a warehouse or partnering with a fulfillment company. Make sure that your products are safe in the temperature environment they’re stored in.

You can also work with a fulfillment company to manage your inventory. When you first begin business, a fulfillment house won’t be necessary, but as your business grows, you may want to consider partnering with one.

Always check the location of your fulfillment company. They will take care of storing your inventory, filling orders and sending them out - they can enable the process of selling and delivering your products to be completely hands free for you.

As your business expands, you may find yourself with an increasing amount of inventory. You won’t want to keep it in your home so you’ll need to make a decision on whether to continue handling orders from a warehouse yourself or outsourcing it to a fulfillment company.

If your business really takes off and sales start to increase, measure the amount of time you’re spending manually filling orders yourself against the cost of setting up your own production line or partnering with a fulfillment company.