Since the first day I opened my shop at A&C Mall, one of the funniest thing I see in my shop is customers trying to negotiate prices down, when 5 minutes before, someone else came in and thought our products prices for the quality of product is quite low. You have people who compare our products and therefore prices to others at Makola. Others want to take the product apart by ingredients and try to estimate our costs based on estimated ingredient prices to justify why products cost too much. While some compare NAYA to Body Shop, Shea Moisture, Aveeno, or Nivea. What you realize across all of this is the customer's perception of your brand. All the above brands cost differently and are in different segments of the market. Sometimes it's justified based on similarities between your products and others, and other times it's purely for the customers own gain. People are happy when a business does a sale and reduces prices by 20, 30 or 50 percent without realizing businesses can only afford to do that if their costs are already paid. Secondly only big business can afford those discount rates consistently because it's already baked into their prices and volumes. Small businesses don't have that luxury. Between time value of money and volumes of products sold, considering all their costs, from rent to transportation to marketing, discounts just eat into your profits if not planned properly.
There are a million ways to price products in any market. The basics of any product price is purely the choice of the business owner and it evolves over time to keep the business viable. Your product can either be low cost or premium and everything in between. This purely depends on the type of business you're building, what your costs are, where you have positioned the product in the market and who you're trying to compete with.
For NAYA BY AFRICA, choosing to produce the quality of product we sell, the variety of products we make, packed in leak proof containers, selling in a branded shop, having knowledgeable employees who can discuss products and make recommendations and wrap gifts at no additional costs, and package in beautiful branded paper bags(which customers get upset when we are out of stock), at the price we sell at, is not something that was decided overnight. It's all an evolution of the brand over the past 6 years. While I may believe our products are properly priced for our market, brand position and costs to keep us viable, others will disagree. What do I know, I have been trading my time to pay for soap for the last 10 years. I will discuss the evolution in detail over the next few posts, because to be honest this is not how I planned it.
How has your business model evolved over the years?