Pricing is an art, not a science.

There’s no fixed answer to the question of what price to charge. The answer is a massive “it depends”.

You only have to look as far as something as near-enough universal as soft drinks to see this.

The unit size can affect price – soft drinks are generally more expensive per litre the smaller the serving size but that’s not always the case.

For instance, where you’re buying your drink will affect the price as well. Supermarkets are generally the cheapest, elsewhere the price will vary.

A lot.

And that’s for something as simple as some sugary fizzy water.

Most other products are more difficult to price without a lot of testing.

For instance, if you’re pricing a Kindle book then you have a lot of things to consider.

Unless you’re offering a CreateSpace printed version as well, your final customer won’t ever get to feel the book in their hand and the page count is vague to say the least.

Price could be free – maybe on a promotional day, maybe as a permanent feature. Or it could be inside Amazon’s preferred range of $2.99 to $9.99, where they give authors the highest royalty payment, or it could be outside that range.

Whichever price you choose, the book will have taken the same time for you to research and write.

But it will affect your likely profit.

There’s always a trade off on pricing.

Unless you’re lucky enough to have a Giffen good – where demand for the product is said to rise as the price rises – then the chances are that you’ll be subject to more normal pricing rules.

Which means that you’ll sell less quantity as the price rises.

That doesn’t mean you’ll make less profit overall though.

Even a Kindle book has a delivery cost – explicitly charged by Amazon if you’re in the higher royalty range.

And almost any product will have other costs associated with it such as your payment processor and customer support.

It’s well worth doing a calculation to see what would happen if you raised or dropped the price of your product.

For instance, if you reduced the price of your product by 25%, it’s unlikely that you’d be able to reduce your production cost by a quarter without affecting quality. So if your production cost was half the current retail price you’d need to more than double sales just to stand still.

Of course, if your product was a loss leader – designed to attract new customers – that might be a good exercise. But it runs the risk of attracting customers who are price driven – ask anyone who relies too much on coupon sites like Groupon.

But think about what would happen if you raised your price by 25%.

Chances are that the only cost that would rise would be your credit card processing fee.

So, based on the earlier figures, you’d double your profit per item sold.

Which means that, unless your sales halved or worse, you’d make more profit overall. Ignoring the lower overhead of customer service and other costs.

As well as that, you’d have more money available to spend on advertising to attract more customers who were willing to spend the higher price.

If you’d like help with pricing or any other aspect of your business, feel free to contact me for helpful advice.