Final pricing levels for products should have flexibility for both increases and discounts to customers. Price increases may be inevitable because of component, ingredient, and processing cost increases. The market may or may not absorb price increases without decreasing volume effects.

The probability of significant sales volume differences at different prices depends upon the price elasticity of the market and number of similar competitors.

Retailers and wholesalers need to consider the issue of markups in their pricing structure, and manufacturers or other product producers need to be aware of the average markup in their industry.

Consumer goods experts suggest the estimated cost of goods should be no more than 15 percent of the suggested retail price because:

The most common errors in pricing are:

Small businesses may have products that would appeal to many different markets or channels of distribution in a single market. However, when you have limited resources, it's often best to select a single distribution channel or a limited number of distribution channels that offer:

Many product categories have significant evolution and life cycles that may affect pricing decisions.

The closer your product resembles competitive products, the smaller the price differences that buyers will tolerate. And the closer the product differences between brands, the greater the probability is that the category is price-elastic, and that brand-switching will occur when products go on sale.

If demand for your product or service changes significantly with slight changes in price, the product category is considered to be elastic with respect to price. If no significant volume changes occur, even with significant price changes, the category is inelastic.

A precise definition of your target buyer is key to designing a package that reflects your buyers' values and will attract buyers to it on the shelf, or wherever else your products or services are available. Knowledge of the target buyer's lifestyle as reflected in the buyer's activities, opinions, interests, and demographics can be manifested in the package names, label design, package copy, and other key communication points.

The ideal price for any product or service is one that is acceptable to both buyer and seller.

In setting prices for your product or service, one of the first calculations you must do is to estimate approximately how large your potential sales volume could be, based on a reasonable assessment of your potential market share in the product category, at different price levels. Knowing the size of the existing market is critical to determining if there are enough customers to establish and grow a business.

Packaging can be simple cardstock tags printed or stamped in black ink (e.g., on machinery, tools, clothing, etc.), or unique, one-of-a-kind containers that are more valuable than their product contents (e.g., imported, hand-blown crystal oil and vinegar cruets).

Walk through any store and look at packages on the shelves. Decide which ones catch your eye in any given section, and why. Chances are the majority of packages that stand out have what's called "graphic identity."

The unique collection of brand or business values that differentiates the business from the competition is known as "positioning." Packaging designs should communicate the business positioning or unique set of values.

Packaging and pricing represent a very concrete way to communicate with your target market and express the positioning of your business.

Many companies, large and small, spend years successfully developing a new product with great market promise but do not adequately test their packaging, pricing, and advertising prior to introduction.

Once you've introduced a new product or service or developed significant improvements to existing ones, you'll naturally want to do some follow-up to measure the success of the project. Whether the introduction is ultimately successful or not, you need to be able to learn from the process to achieve more success down the line.

There are as many methods to screen new product ideas as there are consultants. Perhaps most, if not all of them, are valid. But small companies cannot afford to incur costly product development failures as part of "the normal course of big business." Even one product failure in a small company may threaten its survival if a large amount of time, scarce resources, and personnel are committed to it.

Successfully creating a real-life product that mirrors your new product concept and meets your company's cost parameters is difficult. It takes months and years, even for smaller companies to accomplish.

Sometimes the best, least expensive, fastest, and least risky way to introduce new products is to copy or improve upon a competitor's new product introduction.

Brainstorming is a way of generating a lot of new ideas, quickly. Once you have a long list of possibilities to work from, you can begin to evaluate each idea from a more practical standpoint. The brainstorming techniques pioneered by Alex Osborn include:

Good ideas can come from anywhere! But can one consciously foster creativity and new ideas on demand? Certain successful companies and creative experts suggest that it is not as hard as most people think. Everyone can be more creative with technique, practice, and motivation. Perhaps "a leap of faith" is also required for the skeptical.

New product development can be categorized into:

How often do small companies go out and test their products against competitive products with users of the product? Every five years? Ten years? Never? Even when a direct competitor introduces a new product, most small companies react by introducing a similar or slightly improved version of the same product instead of considering the sales potential and strengths of their entire line.