How to price your product?

[WhateverCheese]

Hello dear Fastlane community,

I am building a little business that is supposed to sell food supplements. The supplement is sold as powder-capsules in 400ml plastic bottles. I've thought up the design of the bottles together with my wife and we love them, they're quality. The next step is to determine a price for the bottles.

This is a rough calculation of the cost for one bottle:



As of now the shipping is paid by the customer. That would be + 3€ (or so) on Amazon. Most likely Amazon will also take a fee. Our product is high quality. A similar product from the US costs about 50€. My wife and I thought that we could sell it for 30 or 35€. Selling it for 50€ would probably still work, because european customers have to pay the shipping to get the US product.

What insight can you share about product pricing? The labour cost is not included yet. At first we will make the product ourselves (through some dehydration and packing). Is there a rule of thumb for the yield/cost ratio?

Thank you,
Artur

 

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[Johnny boy]

Go premium. It's all brand perception anyways. The higher profit margin will allow you to put money into your product, ads, returns, etc.

Read about it on the four hour workweek.

$47 a bottle minimum. If it goes for 50 then sell it for 77. Some people want the cheapest, some want the best and use price to determine quality.

In an asian country, there was a brand of alcohol (I forget the name) that was the highest priced one out of all the competitors. They figured they would sell more by lowering their price and so they did. They ended up losing tons of sales. People equated the quality and status to the highest priced alcohol available.

 

[Walter Hay]

Go premium. It's all brand perception anyways.

@WhateverCheese
I agree with Johnny boy. If your product is good quality and you can present it with an image that appeals to people who only want the best, a high price is likely to generate more sales.

You say that you and your wife have designed the bottles, but do you mean the labels? If so, make sure that your label design will make people feel that your product is something they must have. In other words it must appeal to their emotions, the appearance telling them that this product is obviously the best.

There are many different ways to do this. Use of gold foil, wax seals, gold print on black, a tiny medal attached with silver or gold thread. The cost of these is relatively small when you consider that you will be influencing wealthy people to spend top money for your product.

Don't be afraid to charge a high price. I have written about the marketing of a 20ml bottle of perfume during the Great Depression of the 1930s at a price equivalent to €20 which at the time was the cost of 700 loaves of bread. It sold like crazy to women who wanted to show that they were wealthy.

Walter
P.S. You and your wife might love the design but you are not the customers. I would be happy to give you an unbiased opinion if you care to PM me with a copy.

 

[Xav243]

@WhateverCheese

1. You seem to pay a very high price for those capsules....
Are they empty?
If yes that makes a cost of 15e /1000. The average price I see in this business ( I work in this area) is around 3-4e per thousands empty capsules (though dependent if they are gelatin, vegetarian etc but 15e is way too expensive).

2. Do you have one supplier for the capsules and then another for Supplement?
For supplement you say your bottles will be 400ml but you take the costing of your supplement in g.
Also be sure about the conversion rate (i.e. are you sure that for this supplement 1ml = 1mg?)

3. What about the energy part? I don't understand what you refer to.

You can PM me if you prefer to talk about this in a deeper manner.

 

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