When it comes to launching a new product, the difference between a flop and a smash hit can depend on factors ranging from marketing to pricing. In this issue of Promotional Consultant Today, we share these tips to help price your product correctly the first time and every time after that.

1. How are your other products priced? The new product you're adding needs to make sense with your current assortment and overall pricing strategy, unless the idea is to test a new direction for your brand. In general, if you have built your brand around being stylish and affordable, then your product should be priced in line with your existing inventory. That will help it appeal to the customer base you've built up and reach new potential audiences.

2. What are the substitutes for this new product? This is often a good starting place for many merchants because it provides them with an idea of the prices shoppers are already willing to pay. If you're introducing a high-end water bottle made with a new and sustainable material that keeps beverages cold for 20 hours, see how other insulated bottles are priced. The idea here is to do a bit of competitive monitoring to find your product's place in the market.

3. How much does the item cost to produce? The cost of production should influence your minimum selling price. It's important to know the cost of your product because selling below that amount means you're losing money. Your minimum price should always be at or above cost.

4. How elastic is the price? Does the price of your product vary? Products that can sustain demand at a variety of prices are considered elastic. On the other hand, products with small price differences are considered inelastic. Inelastic products are easier to price because their prices don't fluctuate much. Elastic products, however, can have prices that vary greatly based on the supplier and market conditions.

Because the perfect price isn't stagnant, figuring out the perfect price for your new item can be difficult. It's important to monitor how the market responds to your item at different prices. Although you can monitor your competitors' prices manually, you can also choose to automate this process by working with a repricer. This type of software aggregates sales history, market and competitive intelligence, and minimum and maximum prices, making it possible to develop informed price changes in real time. Repricers can help you efficiently price a new product by continuously updating the price to keep up with the market's reaction to it.

5. How much inventory do you have? Based on how much inventory you have in stock, use pricing to prevent depleting your levels or having an overflowing warehouse. To avoid the former, increase prices when you're low. In case of the latter, lower prices to make room for new merchandise.

Source: Angelica Valentine is the content marketing manager at Wiser, the leading pricing intelligence suite. Wiser helps online retailers reprice their new and established products in real time to optimize for revenue and profit.