Thursday, February 7, 2013

Market Research -- #3 "What Price Will They Pay?"

(This is a continuation of a series of articles that started with "Conduct Some Market Research")

So now we're up to having established that you have developed enough of a following to market your perfume. Now the question is, "how much will your followers be willing to pay?"

New retailers have misconceptions about pricing and tend to think they need a formula to set their retail price. More sophisticated marketers conduct price tests to see what the market will bear and what price will be the most profitable for them. The goal in setting a price is to reap the greatest profit for your perfume. But finding that price may only come with many experiments and much fine tuning.

Your first step is to get a handle on what potential customers will be willing to pay. How do you determine this? Simply by looking at what they are paying for your competitors' fragrances.

This won't give you one single price. It will give you a range of prices. When deciding who your competitors are, it's important to select individuals or companies that are actually making sales. Not every fragrance out there is selling!

But suppose, after looking around at retail shops and Internet sellers, you determine that, for a 1.7 fluid ounce bottle of EDP, EDT or whatever, your competitors are changing from $35 to around $65.

This would be a pretty wide range but you'll also see that most of the fragrances you hope to compete with will be grouped around a single price, perhaps something in the $45 to $55 range.

Now it's up to you to do some strategic thinking. You have to ask yourself how your fragrance will fit into this market. Will your fragrance be better known than the others and therefore perhaps able to fetch a slightly higher price? Or, as an unknown, should you make your fragrance more affordable?

A lot depends on your knowledge of the people you are trying to sell to. The better you know them and their shopping habits, the better chance you have of selecting an acceptable (and profitable!) retail price.

When in doubt, go with the popular crowd. If it's your first time out, understand that you have a lot to learn. But storing up a knowledge base of real life experience in retailing your perfume can be exactly what you need to ultimately be a solid success.



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