Teas.com.au Q&A Session
Pricing your product correctly is essential to your tea business survival.
Whether you sell tea online, market stalls, beauty salons, tea shops or cafes, pricing your tea using the tips in this video will help to getting a step closer to selling tea profitably, in your style.
In the above video: This week we are going to talk about price.
We would like to thank Mary Anne for shooting over this price question.
This is actually quite a bit of a sensitive topic and we want to be more factual about it.
At the end of the day, if the price is not right, it’s not going to sell.
We are not saying that you have got to discount it; in fact we rarely do discounting ourselves.
What I learned about business when I was just starting is when you start discounting, there is nowhere for you to go but downward spiral.
One of the effects of discounting is that it actually trains your customers to wait for your discounts rather than buying from you on your regular price.
Therefore, discounting is really not a good idea.
So the question now is, how will you price your tea?
If you go to distributor, you will find that many of them provide RRP (Recommended Retail Price) but we do not do that.
Generally speaking, the main factor here is not only the quality of the product but how it is marketed, how it is being perceived.
For example, if you have a box of tea and you market it to a beauty salon and to a weekend market, you will find that, that same product can be marketed and priced differently.
That is why you really need to think about your target market.
Imagine your ideal customer – someone who wants buys tea from you regularly, and you love doing business with them, and you can sell a box of tea for $10.00.
When you take a look at your competitor and most of them are selling it for $10.00, then you will need to sell for the same amount unless you have a very compelling reason to sell it to $15 or above.
Or, if your competitor is selling it for $20 and you will sell it for only $10.00, then your target customers might be suspicious and might think, “ I wonder what’s in this thing, why is it so cheap”.
What I am trying to say, price is not always, “the lower the better”.
You need to take a look into it from a broad angle or perspective.
If you are new to the tea business then then price should be part of your product creation process / research and you need to position it right in relation to your market.
Too high, or too low, is going to hurt your business.
So, how much does it really cost?
This part of the conversation is very important, like I asked Mary Anne, “So how much are you willing to spend?”
“Not sure,” she replied sheepishly.
There is absolutely no shame in that, what is important is the next step – how to move on to the next phase which involved looking at the competitive products and how much are you willing to spend.
Let’s now go back to that box of tea for $10, and let’s imagine that you want a 100% margin on that because you are going to have some bits and pieces that you will have to pay.
Imagine that you buy the tea from us for $5, you need to ask yourself, “Is that going to get you the kind of product that you want because if your plan has got a lot of expensive ingredients, or if you are looking to have the $5 piece in 200g or larger, you are not going to hit the mark and chances are the price will not be right.
Or you may say, the first order Salina quoted me for $6 and I know that if I up the quantity to the next price tier, it is going to drop to 5.50 and I am happy with that.
Because I am testing out, for the first order I will not hang on to a lot of goods but I am paying a little bit more.
That is not a bad thing because at the end of the day, you will need something to get out there. Get your phase 1 product out there, test the market, get the feel for what people are after, and then finetune it as you go along.
So, there you have it, a little bit about product creation in connection to pricing.
Remember, don’t be shy in talking about money because you are selling tea and the involvement of money is inevitable.
You are not a slimy sales person but you are not also doing it for charity but for your business, something that you are passionate about.
You need to price it right in order to sustain your business, it is not about just selling and selling, and realize that you don’t actually have enough money left to enjoy your life.
So, have a really good think about your pricing strategy and if you have any questions or help with this, feel free to drop us a line via email@example.com, or us the contact us form on our website Teas.com.au.
If you like this video, hit “LIKE” and comment as well. 🙂
Bonus – found this article as I was preparing this video blog – enjoy – http://www.entrepreneur.com/encyclopedia/pricing-a-product