You know those beautiful designer lingerie sets that are so expensive you’d have to take a loan out just to afford one? There’s a reason they cost so much, and it’s not just about the fine quality and craftsmanship. Often times you are paying for the brand itself and the experience that comes with it.
When doing my initial planning, I first aimed for a pricing structure that would place me lower than my competitors with comparable product. I thought that would be a great way to attract customers, and I couldn’t understand why a bra would need to be marked up so high. But after months of number crunching and financial management courses I found that those products were marked up not just to make a profit, but to keep the business up and running on a daily basis. If I had dropped my prices as I had originally intended to do, I’d surely be out of business within a year.
It is important to set each price for adequate accommodation of your business’s overhead budget, taking into account employee salaries and the cost of goods, supplies, legal fees, advertising, etc. I learned that a smart pricing structure is directly related to the cost of doing business. If you price your goods accordingly, your customers are sure to understand and learn to view you as a respectable entity.