Product Decisions and How to Set a Price

A, product, is, more, than, just, an, object., It, has, a, core, (the, benefit, you’re, really, buying),, an, actual, product, (features,, quality,, design,, packaging,, brand, name),, and, an, augmented, product, (warranty,, delivery,, support,, financing,, returns)., When, companies, sell, nearly, identical, actual, products,, they, often, compete, on, the, augmented, layer., This, is, why, two, identical, phones, from, different, retailers, aren’t, the, same, purchase.

Products, go, through, a, life, cycle:, introduction,, growth,, maturity,, and, decline., The, marketing, approach, needs, to, change, at, each, stage., It’s, important, to, be, clear, about, this, limitation, because, examiners, appreciate, it., The, life, cycle, describes, what, often, happens,, not, a, strict, rule., Products, can, get, revived,, skip, stages,, or, stay, in, maturity, for, decades.

Now, let’s, talk, about, pricing., There, are, three, truly, different, starting, points.

Cost-plus, pricing, begins, with, your, costs, and, adds, a, margin., It’s, simple, and, defensible,, ensuring, you, cover, costs., But, it, ignores, the, customer., If, buyers, would, have, happily, paid, double,, cost-plus, leaves, that, money, on, the, table., The, more, efficient, you, become,, the, less, you, charge.

Competitor-based, pricing, looks, at, what, rivals, charge., It’s, easy, and, safe,, but, it, hands, over, your, most, critical, decision, to, a, company, whose, costs,, customers,, and, strategy, you, don’t, fully, understand.

Value-based, pricing, focuses, on, what, the, outcome, is, worth, to, the, customer., This, is, the, hardest, approach, but, captures, the, full, value, created., Software,, which, costs, almost, nothing, per, copy,, is, often, priced, this, way., That’s, why, the, price, can, vary, widely, by, customer, type, instead, of, tracking, cost.

On, top, of, this, are, launch, tactics:, penetration, (enter, low, to, gain, market, share, quickly,, then, raise, prices), skimming, (enter, high, to, attract, buyers, who, value, it, the, most,, then, lower, over, time), bundling, freemium,, and, psychological, pricing, like, ending, prices, at.99.