“Perceived value-based” pricing is pricing for a product or service at a level that reflects the potential savings, the highest satisfaction level, or the maximum use that a client will receive from the purchase and the use of the product or service. Overall, a perceived value-based price is set at the highest level that your…
Price skimming is a pricing strategy which utilizes a high price for a brief period of time; this type of pricing is generally used with the introduction of a new product. The purpose of this pricing strategy is to “skim” the profits before the competition enters the market. When TiVo launched its early DVR products…
To discount or not to discount—that is the question that many sales professionals must answer. At first view, it seems that discounting prices should stimulate new sales and be a good thing. But that is not always the case. The best advice may to be to hesitate and think first. Let’s examine the potential consequences…
There is something special about a fine bottle of wine—for many, a fine wine is worth the hefty price premium. Yet, that price premium is how many wine lovers actually determine a fine wine’s merit— the higher the price the better the wine. Scientists at California Institute of Technology studied premium pricing and its impact…
Pricing may be the most important decision that the entrepreneur makes. Often this decision is rushed and done by the seat of the pants. Most entrepreneurs think pricing is easy.
You submitted your proposal to your customer two weeks ago and reluctantly presented it with line-item detail like the bid required; you also submitted a package price. Finally, you sit down with the grim-faced buyer, who pronounces the pricing too high by citing lower line-item prices from the competition. “If want the business, you need to lower your prices,” declares the buyer. This is called cherry picking.
Niche marketers should price their products and services based on the value received by the customer: it is the customer’s perception of value that counts. If you calculate price based on cost and/or the competition, you are not in a niche market or you are pricing incorrectly.
“Money is better than poverty, if only for financial reasons.” Woody Allen, comedian, actor, and director (1935- ) Pricing may be the most important decision that the entrepreneur makes. Often this decision is rushed and done by the seat of the pants. Most entrepreneurs think pricing is easy. Many small businesses use mark-up pricing. Mark-up…