5.5. Know your clients, sell your product

At this moment, a classic entrepreneurship manual will introduce you to the business plan, and how to organize your business. By contrast, we recommend you first to get to know your clients / customers, and design your product according to their needs, or to the opportunities you spotted.

You learn things about your clients through what is fancy called “market research”. This is just the analysing process, through which you build the profile of your customers: age, gender, married / single, average income / high income, less educated / very educated, employee / business owner, and the list of characteristics can continue… but it is important to find those characteristics relevant for your product idea, those characteristics that make the customer to buy your product or develop an interest in your product.

You might say it is hard to know what will make people to buy something, and you need a lot of resources to thoroughly investigate the issue. So, another option you have is to create your “prototype” product, and see how people react to it. Do they like it? Do they say they need it? Do they ask already for the price? To receive the first feedback, you could organize a focus group with people who you might think they could become your buyers. Present them the product, let them “test” it, and see what they think about it. Or try to sell your first samples or give away some “samples”, and ask for people’s suggestions for different aspects, starting from the product name to product’s usefulness for them.

Before start selling your products, you have to put a price on them. The price can be set up by using the production costs and adding the profit you want to make. At the same time, mainly in the service businesses, the price can be set by analysing how much customers will pay for your product / service. Moreover, prices are highly determined by what happens on the market in regards to demand and supply. When on the market the demand is high, people buy more of your products or similar products from your competitors, and people believe and perceive that there is a shortage in these products. Thus, the prices will increase. However, when your products or similar products are too many on the market, so the demand is low, while the supply is high, the prices decrease. Thus, in these conditions of high supply and low demand, your competitors will start reducing the prices, in order to make people buy the products, and you might need to do the same, if you want to sell your products… or you should rethink your product / service or offer, for instance you might think to “differentiate” your product by adding some buying incentives, such as increase in quality, provision of additional services or special warranties, etc.

Keep in mind that people evaluate products / services that they will buy looking to the quality and the prices of the products. Thus, you might want to position yourself as a enterprise that can provide more quality than the competitors, while having the same prices; or that you can provide the same quality products, but at lower prices; or, in the best case scenario, that you can provide more quality at lower prices. Moreover, when you think about prices, and what your customers pay for your products / services, pay also attention to the opportunity costs that your clients might have: such as the costs they might have with the time they consume to buy a product, transport costs – to go in the store, or at your office to get the product, giving up to buy other products / services, or embarrassing costs (if they have to admit they have a problem when buying your products, such as a specific medicine drug, for instance). Thus, finally, only your customer will know the final price of the product bought from you.