Forums: Discussions for entrepreneurs and small business.

Depending on the invention I suppose.
I start with 3 times cost then compare that to the market and adjust accordingly up or down, that is just me.
I suppose if your invention was one of a kind, something everyone needed to have a better life, (like say Cialis) and no one else fills that niche, you would be able to get more than that percentage wise.
depending on the structure you use to distribute you may have to discount as much as 50% from retail price.
Have you sold any yet? get some target customer feedback, what are they willing to pay. if it`s completely new it may be a value thing where no practical formula applies, and the sky is the limit.
just a thought

The only principle of price is that a thing is only worth whatever someone will pay for it. The "someone" generally is a lot of people, joined together as "the market."

So the above idea of doubling or tripling the costs is a good starting point, but it`s only a guideline. Ultimately, the market determines the price. If you`re selling your item so fast you can`t keep up with production, obviously you can then increase the price as much as the "market will bear."

Generally, 2X to 3X the manufacturing cost is a good starting point.  I do recall a software package a few years ago that did an email and blog blitz announcing the product.  They started with a price of $1 and added $1 every day until the volume dropped off.  They wound up at $14.95 and sold millions of copies.  There was a music group that recently sold their latest DVD online for "whatever you want to pay".  They had very few take it for free, and the average was about $9.  After selling several thousand download-only copies, with little or no overhead, they were happy and plan to do it again.




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Steve Mann
Internet Videographer
MannMade Digital Video
My Email

That brings up a great point, which is that people are just as averse to paying nothing for something---getting it for free---as they are to overpriced items.

The psychology is that "If it`s this cheap or free, then it must be very poor quality."

Thanks for the info guys ! The product is essentially one of a kind, in the sense that it radically improves upon an existing apparatus (in the fitness field), in a totally new configuration that will replace at least 8 other apparatuses in one, with functionality and practicality. It`s not going to change someone`s life ( like the Cialis Stan referenced), but it will save time, space and $$, and is the epitome of evolution of this apparatus, and people will want it ! I haven`t fine tuned it and whittled down the final production cost, as I just received the prototype, but I believe I can get around 3 times the cost for it. Anything over that may start to discourage potential buyers, but I`ll get a better idea when I test market it in a few gyms and get some feedback.

Another question to ask yourself, is it better to sell 10 at 50% profit or 30 at 25% profit.
overtime the other 20 may actually buy anyway.
Just a thought.

Stan brings into the equation "word of mouth." If people start buying the product at one price, and they really like it, they`ll talk it up. That`ll get people who were on the sidelines debating whether or not to buy it into the mix. A good product begins to develop "buzz" and that helps sell it.

The downside is that in today`s world, so many people just assume that an entry price will be high and then come down. You have to decide if you`re going to follow that deflationary path.