The “right” price is not one number, determined by numerical analysis. Too many factors influence it. It’s a mystery you cannot fully solve. It’s a pursuit that can occupy you for a lifetime. Source: The Tao of Pricing.
“If you open yourself to insight, you are at one with insight, and you can use it completely.” — Source: Tao Te Ching. “If you open yourself to the mysteries of pricing, you open yourself to riches.” Source: The Tao of Pricing.
If you have excess production capacity for your premium brand product, consider a lower cost version as well. However, make it a separate brand (or manufacture it for a private-label client) instead of cheapening your premium-brand image. Source: The Tao of Pricing.
Adding a higher-priced model (even one that sells poorly) can make your other models more attractive. Some customers (and some companies) wish to avoid the highest priced model. Help them by giving them an even-higher-priced model to avoid. Source: The Tao of Pricing.
A peasant may not remain one. Offering a range of models at different price levels lets consumers develop brand loyalty — before they can afford your best. Example: By ignoring the low ends of their markets, GM and Ford allowed Toyota & Honda to grow strong enough to then challenge them with high-end cars. Source:Continue reading “Rationale for Entry-Level Offerings”
Beware of “loss leaders” that could become just-plain-losses. Example: A cellular service attracted droves of customers for its “evenings free” promotion. But… most of them only placed evening calls. Source: The Tao of Pricing.
Water seeks its own level. So, too, do prices. Products sold cheaply in one country will find their way to countries where they are priced higher. Source: The Tao of Pricing.
There are many paths that increase short-term revenues but hurt profits in the long run. The wise owner will watch out for them. Particularly devious: Large discounts given by sales managers to reach a revenue total that earns them a bonus. Source: The Tao of Pricing.
The more your customers invests in your products: Time (for learning/training), or Money (for peripherals) …the less likely they are to switch to a lower-priced product. Use this knowledge wisely(!) Source: The Tao of Pricing.
Are you increasing sales with your price cut? Or… Just increasing your customers’ inventory? Advancing their expensive purchases by a month or two? Price cuts that don’t increase total sales can be as worthless as the promises of a known liar. Source: The Tao of Pricing.