Mike, for the longest time wanted to resign from being employed. He wanted more time for his family and start his dream business. He was retrenched this pandemic and saw this as an opportunity to do what he always wanted to do. With some savings, he and his wife started a home-based business selling food. Getting in the food business was not a problem for Mike because he has a degree in culinary though he was employed as HR in a production company.
I am writing this with the intention to help those people who are starting a business price and promote their products or services.
Here is my promise, after reading this, you will have an idea on how to price and inform people about your new product or service (In this article, I will refer to services as products). I thought of these 2 because in my experience, many people can create or trade a product but do not know how to price or promote their products.
What you will learn in this article is simple and easy to apply, yet can be profitable if consistently done. A little warning though, do not expect to hit it big time right away. I just had to put it here to manage expectations.
Simple Manufacturing, and trading are 2 of the business models out there that will provide you with cash as soon as the selling happens. Manufacturing is creating an output by putting together raw materials, for example, making Longganisa. Trading on the other hand involves buying and selling of finished goods, an example would be buying products from a grocery and reselling them.
Price and Promotion
Decide first on the price.
The most basic way to arrive at pricing your product is by computing for your costs and adding a margin (patong) – To not complicate matters for now, tax will not be included.
For example you bought a box of water for 100 pesos with 10 bottles of water. That will be 100 pesos/10 bottles. Each bottle will cost 10 pesos. If you commuted and spent 10 for the trip then you divide 10 by 10 and it will give you 1. If you add 10 and 1, you will now have a cost of 11 pesos. From 11 pesos, you may add your margin or patong. How do you get it?
There are 2 ways:
- Find out how much your competitors are selling, you may go a bit lower than how much they are selling, or equal to their price or higher.
- The other way is to understand the profile of your market. If you are selling in an area where the market can pay high and you have less competition, then you can dictate the price.
Let us now go on how to promote your product. The most cost effective way to promote your product now is through social media. However, in social media, it is a battle of attention. There are 4 important assets when promoting in social media. Let us do organic or unpaid for now, which means you rely on shares.
The 4 assets you need are:
- Friends and followers. You need them because they will be the source of your initial income and word of mouth.
- Nice photos. You need photos are attractive. The looks give you credibility; it makes you look trustworthy, which is important for someone starting a business. You want to be more sophisticated, go for videos.
- Product information. People want to know more about your product beyond images. They want to know specifications, and benefits.
- Social proof. This is the testimonial of people who have used you product. This helps convince people to buy your products. This can be in the form of reviews or ratings.
These 2 are just part of the bigger process but crucial in the early stages of the business. By promoting and pricing your product appropriately, you will have the benefits of gaining customers and hopefully repeat customers.