Setting the Price of the Product/Service

Price of product is always inversely proportional to number of paying customers to reach X amount of revenue.

Lets say Price of Product or Service is 10 lakh INR

Product Price | Number of Paying customers
INR 1 | Collect 1 rupee from 10 lakh people
INR 10 | Sell a product to 1 lakh people
INR 100 | 10,000 customers willing to buy it
INR 1000 | You just need to find next 1000 customers
INR 10,000 | 100 Customers
INR 1,00,000 | 10 Customers
INR 10,00,000 | 1 Massive Client

✔Setting the Price of the Product/Service can be a key factor.

Keeping It too high and too low wont help in any case.

Too low price would result in increase in marketing, earlier you had to sell service to 10,000 customers Now One has to sell it to 1,00,000 customers resulting in increase in sales and marketing expense.

Too high price would lead to decrease in number of customers who are able to buy the product with given Income status.

However these challenges are well tackled by companies via execution.

Companies Like Zara selling products at higher prices but are profitable because they know key aspect “ Why would customer buy their product at this given price?”
Trick : Use this reason well to convert more customers at faster rates

Companies with low price products but with great marketing and sales execution can achieve the same.
To reduce the cost of marketing/sales, One of the key aspect is “Make your customers, your product ambassadors”. Customers themselves onboard more customers for you due to quality of product, Coupons, discounts , so on..

One thing to be kept in mind will keeping X price is that COST OF AQUIRING OF CUSTOMERS (CAC) should not be too much that it leads you to a loss incurring company.

Customer with increased price rates will also require increase in quality of impact created due to that particular service/product in their current workflow.

ps: it’s simple mathematics to understand

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Hargun Kaur

SWE Intern @GitHub USA’21 | Upcoming Intern ‘22@ Microsoft | Founder @Codeflow | MLH Summer & Fall (Software Engineering track) Fellow’21 | Microsoft Engage’21|