Pricing A Product

When determining the value of your product or service, there are two ways of pricing: "cost-plus" and "demand." Cost-plus incorporates your fixed and variable costs and adds your desired profit margin (the "plus"). Demand pricing is based on what the market will bear-or what you can "demand" for your proprietary product. That said, you'll have to find the intrinsic value in what you could've delivered to market. What cost savings, what productivity increases, does your product provide? Once you figure out the monetary benefit, you can price your product accordingly so you deliver value, but you're also maximizing your sale price. Don't forget to factor in the lifecycle of your product or service: Will customers come back for more, and how soon?