The price is the dollar value that we attach to our goods or services at the time of selling them. In order to determine what will be the price or prices of our products we can use two methods: the cost method, which consists of adding all the costs of the product and then adding the margin of profit that we want to win, for example, 25%. And average method of market, which consists of determining the price of our product, based on the average of the prices of products similar to ours that exist in the market. However, to determine what price to our products, should not be a simple task, should be a decision that we meditate and look well. These two methods should not be used exclusively, but yes we should take them into account when setting the prices, we should always know what the costs of our products, so that, for example, we try to distance ourselves as much as possible of the balance point (where the costs are equal to sales).
And we must always know what is the average of prices products similar to ours, so that we serve as a reference to, for example, do not move away much of this average. When defining the price of our products, we must always put ourselves in the place of consumers, as we believe that they would be willing to pay the prices of the products of our competitors by our given products (are similar or complementary to our products), given the characteristics of our product, their benefits, their exclusivity, brand identification, place of sale, etc. It is generally think that having low prices compared to prices averages for the market is the best way to compete, however, we must be careful with this. Having low prices, gives us greater possibilities of increasing the number of customers, as well as the frequency of purchasing our product, but with the disadvantage that besides having a low profit margin, by opting for low prices need a good cost reduction, for example, the materials that make up our product, and thereby, We could take the risk affect or reduce the quality of the same.