Archives posted in: Pricing
“Discounting becomes a drug that is hard to get off, and creates this basis for consumer to not trust regular prices,” Uri Minkoff.
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I suspect Mr. Woodman believed that the GoPro could become the hot item for the holiday season. But $400 seemed a bit high for the average consumer. Why not drop it? If the price was lower, then more people may buy it, and GoPro may become a consumer product giant. Perhaps it could join the leagues of Apple, Cannon, and Sony?
More Dedication to understanding its customers makes a company more knowledgeable about the competitive landscape and better equipped to anticipate changing conditions. The entire company feels less insular and more connected to its existential purpose: serving customer needs profitably.
More For Amazon Web Services (AWS), on the other hand, while your final price depends on your usage, the pricing is transparent down to the hour. While you may not know the amount due ahead of time, you know exactly how they will arrive at that number.
More Notice the deal specificity. Target prices are deal dependent. That means it can vary between customers and between selling opportunities with the same customer. Target prices may be customer dependent, product mix dependent, quantity dependent, promotional timing dependent, competitive situation dependent, or even cost dependent.
More Pricing Done Right provides a roadmap for improving pricing practices within any market-oriented firm. It provides a framework for managing pricing decisions in any organization. It clarifies the best practices for defining the organizational culture, architectural hierarchy, and routines for getting pricing done right.
More Firms often sell low margin items because customers seek the low margin items and, when buying, buy higher margin items as well. These low margin items can make sense through their enablement of the firm to profit from economies of scope. Killing low margin items can make sense in some cases, but other cases doing so will kill the firm.
More Agreed, the signal may not be exact when using publically available information to benchmark competitive prices. It may not be exactly precise even when found from market research. But it will generally suffice for most pricing questions. In many cases, it must suffice.
More The fact that consumers buy gas on a continuum rather than in discrete gallons (unless you’re a wizard with the gas nozzle handle) likely makes it easier for both sides to live with the current arrangement. The pump price and volume numbers go along until the tank is full or you release the handle, and there perhaps isn’t much analytical thought put into the final ratio that appears.
More Pharmaceutical formularies, like other medical solutions, are best priced according to the value they deliver relative to the alternative treatment for the target disease. If the new solution provides more value, it should have a proportionately higher price. If it provides less value, it should have a proportionately lower price. This is the concept behind value-based price: price to reflect the prices of alternatives adjusted for their differential value for the target customer.
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