Some of you get to have the joy of setting prices on your products and services. This is a very complicated subject. If you're fighting the commodity game it's all about elasticity of demand. Fall out side of the pricing band and you're toast. Volume comes from the rest of your value proposition.
Then sometimes you have a brand new product. 
Rookies think "it's all about maximizing profit" so they set the price high, then drop like a rock when competitors start eating their lunch.
Back in the days of corporate raiders and "Greed is Good" I attended grad school. One of instructors pointed out the goal of a corporation is *not* to maximize investors return on investment but to provide a reasonable return on investment. I guess reasonable depends upon your investors. But this is one of the reasons I like Costco. They provide a decent return on investment, but pay a lot more attention to taking care of their employees. Sam's Club pays about 40% less than Costco. Good business? You bet. Costco sells more per square foot and has happy employees.
When pricing your product, think about all your objectives for your product, your company, your channel and your customers. Perhaps your major objective is to build fierce loyalty to your product and company. So your overhead increases (cutting into margin) and maybe your price is at the lower end. So you operate at lower margins, but you increase your loyalty base, selling more product over time, and actually cut sale acquisition costs because your churn goes down.
Think carefully. This is important.
Comments