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A lot of the time u cant. But the usual business answers -' What some one is willing to pay' or 'what it costs us to make' - are often worse than no answer at all. Consumer product businesses are particularly guilty of this: pricing becomes a function of manufacturing costs.
In determining the value of what u r selling it helps to ask urself some of these questions:
how unique is it ? Can they buy it for less from my competitor ?
If so, are there some real competitive advantages of my product ?
Can i sell it for more to thier competitors ?
How badly or how quickly do they need it ?
What would it cost to replace it ?
Are there any precedents that can help me ? Is there a 'passion factor' ? Suppose u r craving to buy an ice cream cone, and when u get to the shop u discover the price has doubled. Are u still going to buy it ?
Is this a one time deal or is this the future ?
When u have a pretty good idea of value, dont be afraid to name ur price. In fact, this is the negotiating instance where it may b to ur advantage to go first. Have ur "back-up" at ur finger tips.
-McCormack
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