How to Price Your Products (Inc. Magazine)
As a follow-up to our post discussing the Amazon vs. Macmillan pricing controversy, we have another excellent story dealing with pricing. The story supports our statement that pricing “is one of the trickiest of all marketing decisions“ but goes a step further to suggest that it may actually be the toughest of all marketing decisions. While we are not ready to agree with that (the toughest marketing decisions really depend on the marketer’s situation), we do agree with the basic concepts presented here.
The story paints a very nice picture of what the marketer needs to consider when setting price and even offers good suggestions for what it will take to get to the right price. As an added bonus the story offers good links at the end leading to even more pricing information.
“The best way to determine if the product is being priced correctly is to watch sales volumes immediately after making any change,” Willett says. “This can be done by watching cash collections (if the business is cash or credit card based) or credit sales (if accounts receivables are used) for the weeks following. If a price increase is too high, customers will react pretty quickly. Also watching the competition can help – if you’ve made a positive change in prices; competitors are likely to follow suit.”
Is pricing an art or a science?
Image by ruiwen