Pricing is ... Specific
(12/8/12 I just noticed I posted this blog a second time. It was first posted in October. I owe you one. I'll post two this weekend.) One of the best things about studying pricing is no two situations are the same. Of course there are big differences, like hardware vs. software or B2B vs. B2C. But differences exist in almost any two pricing situations. Apple must think differently when pricing an iPad vs. an iPhone vs. an iPod. Samsung must think different than Apple when pricing Android phones. This is important to you because it tells you that you will not read the perfect solution to your pricing problem in a book. You won't hear it in a speech. The best you can do is learn the fundamentals. See how other people applied the fundamentals to their different pricing situations and determine if this can apply to you. Even though pricing is specific to your situation, these fundamental pricing concepts are universal and apply to almost every product. These fundamentals are Value, Segmentation, Portfolio Pricing, and Pricing Dynamics. Much more on each of these concepts can be found throughout the blog history. Value - Know how your customers value your products and you'll know how much to charge. Use Value Based Pricing. Segmentation - Different customers are willing to pay different amounts. Find ways to charge them close to what they're willing to pay. Portfolio - When you have more than one related product you have an opportunity to enhance your profits through smart pricing. Be aware of the nuances of pricing substitutes and complements. Dynamics - Markets change, prices must change too. Know what to expect and how to minimize any damage to your profitability. If you understand these four fundamental concepts and apply them to your company, you will be more clear and confident about pricing in your specific situation. If not, consider contacting a pricing expert. Mark Stiving, Ph.D. – Pricing Expert, Speaker, Author photo by nebarnix Sign up for the Pricing Perspective to get a monthly recap of these blogs plus more insights on pricing.
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