How Much to Charge?

How Much to Charge?Three players are vying for the top slot in the smartphone universe: HTC, Samsung and Apple. Recently, the price of the HTC One dropped to $49. The Samsung Galaxy S4 has been seen for $99. The iPhone 5, which is the oldest of the bunch, is still priced around $199.

Each phone has its advantages, but there is no clear winner, unless you are an Apple-only person. Is Apple hurting their sales by keeping the price at $199? It is hard to say. They may be trying to keep an impression of exclusivity around the phone and the brand, or they may prevent new buyers from considering the phone.

Apple has so far avoided releasing more than one new phone at the same time. They will still sell you previous generations for “free” or for $99, but they do not yet have a lower-featured new phone. Just as Apple has a very carefully considered pricing policy, you need to carefully consider how you price what you offer.

Here are some things to consider as you figure out how much to charge:

  • Supply vs. demand: if supply is short, you can charge more. If the market is flooded, you have to charge less.
  • Positioning: if your offering is at the high or low end of the market.
  • What your competitors charge.
  • Differentiation: how unique your offering is.
  • For a service: factor in your hourly rate.
  • For a product: factor in how much it costs to produce.
  • Market demand will vary, so cover your costs enough to make up for the low times.
  • The amounts you pay for rent, utilities, insurance, etc.
  • How long it will take you to pay for the development costs.
  • Legal fees to protect your product or service.
  • Talk with potential end users of your product or service to find out if they think your proposed price is reasonable.

Value is important. But people will only pay what they think something is worth.