Many business owners and sales reps hate price objections. They view price objections as some kind of faux pas that they should have avoided, an awkward situation, best resolved quickly (and often with huge damage to profits). Do you like price objections? When was the last time you heard one? (I recently spoke to the [...]
As expected, Amazon this week launched a new media tablet, the Kindle Fire, at a $199 price point. This immediately started the debate about whether the Kindle Fire was an iPad killer. Indeed, this debate overshadowed the overhaul of the entire Kindle line up, which now starts at just $79. These devices are less portable [...]
Creative people love making things– widgets, software, knowledge, service calls. A lot of businesses and product lines get started this way. Someone has a cool idea to make something. Skeptics shoot down the idea. The founder or engineer makes it. Eureka! Triumph! Now, how to price it? At this point, you’ve done the hard work. [...]
Many small business owners consider pricing some kind of dark voodoo that you can only get right with the appropriate incantations, or access to a pricing consultant who knows the right incantations. At risk of hurting my own business, I’m going to tell you that pricing doesn’t have to be so hard. In fact, customers will [...]
It’s no secret that companies often change package sizes to mask or soften price increases. Coca Cola is going one step further, touting it’s 16oz bottles as “more for your buck” at $0.99. Want more soda? You can pony up $1.29 for 20oz, a 30% price increase for a 25% volume increase. Coke is happy [...]
Twitter is abuzz with the anguished cries of Netflix customers, many of whom will soon be paying $16 per month instead of $10 per month for movie rentals. Many others have angrily threatened to cancel their subscriptions. Instead of focusing on that, though, let’s look at how Netflix could raise prices by 60% (for some [...]
Groupon has taken the local deal market by storm, growing quickly to $2B in revenue (depending on how you define “revenue”). The local deals company has also created massive buzz and is now preparing for one of the largest IPOs in history. As a “pricing person”, I get a lot of questions from small business [...]
If your maximum price is determined by the perceived differential value of your offering, how do you know what value customers perceive. Many of them won’t tell you, especially if they think you’ll use that information to jack up the price. Here’s an example of a product that for many buyers has a really high [...]
I get a lot of questions about price optimization, so I just wanted to make it really simple. Write down your costs. Of course, you won’t know your real costs, so just use estimates, preferably from 2-5 years ago. These costs won’t include much nuance about fixed overhead, variable costs, service costs, customer acquisition, or [...]
Your price ceiling is limited by the Perceived Differential Value of your offering. Customers determine this, but you can help them along the way. Your price floor is limited by your costs. If your floor and ceiling are the same height, you are going to get squished. Never limit yourself on price. This is the [...]
