How to Determine The Price For Your Business/Service:
Our price calculator is designed to be simple and easy to use. It covers everything you need to price your test prep business
We hope this calculator helps you make more money for your business.
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How To Price Your Test Prep
One of the most challenging aspects to starting a test prep business is determining how much to charge for your test prep.
When businesses under-price their product, this can be extremely detrimental to their bottom line and reputation.
Often times, businesses under-price their products to drive demand and volume, but that last thing you want is for customers to view your product/service as "cheap." Additionally, this can have a big impact on the type of customer you attract, which can be difficult to recover from.
On the other hand, when businesses over-price, this tends to be just as damaging to the business.
When customers buy, it's likely that they will explore the internet and look at other competitors to ensure they're getting the best value + deal. This is why it's so important that you research your competition and understand where you land in the marketplace.
Here are some factors to consider when pricing your product:
Understand your customer
It's important that out of the gates, you identify the type of customer you want to attract and how much they're willing to pay for your service. One great way to do this is by surveying your customers. Here are some important items you'll want to takeaway:
- Customer demographic: Age, gender, location, etc.
- Buying habits of your customer: What they buy + when they buy
- Level of price sensitivity with your customer
All of these segments will help you identify the type of customer you're attracting and how to price your product accordingly.
Understand your costs
When pricing your test prep, it's critical that you first identify all of your costs and consequently mark up your test prep so you can factor in a profit.
The actual cost of your test prep may include things like:
- The actual cost to make the product (ie. raw materials, supplies, manufacturer).
- Shipping + overhead fees
- Operating costs to run your business
You may want to consider creating a spreadsheet with every single expense involved in operating/owning your business. This will give you an idea as to what you need to generate in order to at the very least, break-even and will help you price your products to factor in a profit.
Create revenue goals
When determining the price of your test prep, you'll want to create goals for revenue + how much profit you want your test prep business to make.
This process is simpler than you may think:
- Think about your breakeven cost (by completing the above step).
- Create a revenue goal based on your break-even cost
- Evaluate the # of items you plan to sell in a given period (make sure this is a realistic number)
- Divide your revenue goal by the number of items you plan to sell
This figure will help determine your estimated price per product in order to meet your revenue goals.
Evaluate your competition
The last piece in determining how to price your test prep is by simply looking at your competition.
The best way to do this is by finding like-minded businesses that offer product(s) with similar perceived value. Then, you can compare prices of the different businesses and determine where your test prep fits best in the marketplace.
All of these factors play an equal part in pricing your test prep, so it's important you evaluate each one individually to come up with an accurate price that will help optimize your business from the start.
More Tips On Pricing Your Test Prep
Lauren Costanza, founder of Bluminary provides us with a detailed spreadsheet of all of her costs associated with running her business:
I knew this would be a self-funded adventure, and I set aside $3,000. During the first three months, I had a detailed spreadsheet where I tracked where the money was going and what was going toward products versus researching and developing new products.
The spreadsheets involved columns and rows of numbers to craft a budget and gain an understanding of how much would need to be invested at each stage of the process - from gathering supplies to building a website, and shipping materials.
Thanks for reading. We wish you success in your business endeavors.
Examples of a successful test prep business
Tyler York from San Francisco started Achievable over 5 years ago, a test prep business.
- Revenue: $1,000/ month
- Founders: 2
- Employees: 0
- Location: San Francisco
Hi, my name is Tyler York and I’m one of the founders of Achievable, a test prep company focused on career-advancing professional exams.
We have a platform that offers rich textbook content, reviews backed by a memory science algorithm, and full practice exams to help students prepare for their exams. Our motto is “learn by doing”, and we believe that we’ve built the best platform for training people to pass tests. Our flagship product is the FINRA SIE and FINRA Series 7 exam courses, and we have recently added a GRE course, and a USMLE Step 1 course is coming in the fall.
Our goal is to take the guesswork out of test prep. With Achievable, you study, you follow our program, you know where you stand, and when you’re ready - you succeed. That’s the Achievable difference.
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