This is critical because there are many different ways you can price a product and you may have found out as you’re proving it that there’s a market for it, but the market may not pay the price you hoped they would or thought they would or maybe you sold way too many of them and you’ve underpriced the product. It can happen either way. With Price It, we’re going to talk about one of the two major ways that you can price your product. You can price it based on it’s costing me X to manufacture it or to buy it from the manufacturer or distributor. Then I’ve got to ship it in and that’s going to cost me this and then you add up all your costs in terms of getting it to the point of sale, whether that’s Amazon’s warehouse or on the shelf somewhere. Then the retailer or the marketplace needs to make X margin, take all your costs and then add your margin on top of it and that’s your price. That’s what I would call a cost-based pricing.
Market basis versus cost basis, which means that you, the formulas that you guys use to decide if this is of interest, a market for you, organic keywords, number of searches, like all of those things are already giving you a price sensitivity. You guys have an advantage. The inventors, they don’t start with that. They start with their idea and then figure out how to make it and what it should cost. They’re at a greater disadvantage maybe because it’s never been done before. They don’t have something to base it on. Most often, we find that the inventors, it’s not that they have something so original that it’s never been done before, it’s that they don’t have experience in any of those materials, products, or manufacturing area. Probably, it’s some comparable product out there that if we looked at it, we can say if we combined this one and this one, they cost this in the marketplace if we were to source them. We can be fairly sure that it’s going to cost a factor of that, and get a pretty good estimate going and we do that. We look at it from both perspectives whenever we’re working on a project because cost is important. If your features can’t be built into it and still achieve the market price you want, then you can’t do it. We have to know both at the same time and work both directions because we also want to make sure we’re building an enough margin for where you want to go. Profit is important and margin is important if you want to hit on the shelf. We’d like to preserve those kinds of margins.