The Perfect Price Point — Is There Such A Thing?

There are a number of factors that customers consider when deciding to purchase a product. In addition to your product’s features and benefits, the customer may consider factors such as your business’ reputation and whether you offer hassle-free returns or free shipping— if the item is being ordered online. But the final hurdle of getting a purchase will always be about price. 

The price of your product is almost always a driver of purchasing behavior. Price your product too low and you may cut into your profit margins or send a message that your product’s quality is lacking. Price it too high, however, and you lose potential customers and purchases. That is why determining your product’s perfect price point is so critical.

When setting these prices, consider your profit margin, which is typically 30% or above. Retailers may want a profit margin of more than 50%, so keep the retail price in mind as you calculate it. You may want to provide a “suggested retail price” to help ensure that retailers price your item competitively — though you cannot control the final price that retailers set.

Assuming that the suggested retail prices provide enough of a profit margin for retailers, it is likely that retailers will use that price going forward. If you sell directly to consumers, you will also want to determine what your profit margin is for those sales. For more information about the factors to consider when pricing your product, check out the accompanying resource.

Brian Farrell is a coach, helping clients achieve their personal and professional goals. He's also the creator of the "QA2 Method". For more about Brian, visit