When you have to price new product or service as a small business owner it can be difficult to know what to charge.
You likely won’t have a team of analysts who can crunch the numbers on an appropriate price point.
Instead you need a simple method for finding this out that won’t cost you a lot and you can find all the the information yourself.
For this look further than Van Westendorps pricing model.
It consists of four questions asked of your target segment:
1) At what price would the product or service be too expensive so that you would not consider buying it?
2) At what price would you describe the product as expensive but you would still buy it? 3) At what price would the product be too cheap for you to doubt its quality and not buy it? 4) At what price would the product be a bargain, i.e. a great buy for the money?
You then plot this onto a x and y axis of a graph and find where the different lines interlink.
Using these links you take the outer most edges and that gives you the appropriate range to charge your customers.
It seems too simple to be effective but it works.
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