Price Early and Often
There is a saying in Chicago on election day, "Vote early and often." Of course voting more than once is illegal. But the saying is ideal when applied to pricing. Price Early and Often Price Early: develop the right products. While you're in the product definition stage you must understand your customers' willingness to pay (WTP) for your future products. You should understand the market segments and the pricing segments that you will be serving. At this early stage you will decide whether or not to move forward at all, and you can also determine what your product portfolio will eventually look like. Knowing your customers' WTP is critical to optimal decision making, especially during product definitions. Even if you don't know their WTP, you surely must state your explicit assumptions. Price Often: respond to and/or drive the market. Many companies release a new product at a set price and rarely revisit the price. This is especially true for companies with thousands of SKUs. Don't be one of these companies. Change happens. Competitors change prices. Competitors add new products. You add new products. New competitors enter the market. Customer preferences change. New technologies become available. New distribution channels develop. The world is rapidly changing around you. Why should your prices remain static? They shouldn't. If you agree, which I hope you do, what are you doing about it? If you don't have a person or organization dedicated to making correct price changes, they won't happen. Most companies and managers, especially in high tech fields, constantly drive toward the next new product and rarely re-visit the existing products. You need to appoint/find/hire some people who are responsible for maintaining prices. Companies create slogans to make sure everyone involved is marching in the same direction. Feel free to borrow this slogan and make it your own. I guarantee if you live it, your profits will increase. Just do it! Price Early and Often Mark Stiving, Ph.D. - Pricing Expert Sign up for the monthly Pricing Perspective to get a recap of all of these blogs plus more insights on pricing. Photo by Nate Hofer
Looking for the latest in product and data science? Get our articles, webinars and podcasts.