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PCT2010 - Product Pricing
PCT2010 - Product Pricing
PCT2010 - Product Pricing
PCT2010 - Product Pricing
PCT2010 - Product Pricing
PCT2010 - Product Pricing
PCT2010 - Product Pricing
PCT2010 - Product Pricing
PCT2010 - Product Pricing
PCT2010 - Product Pricing
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PCT2010 - Product Pricing

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This session will introduce the topic of pricing, discuss different types of pricing models and give advice on how to go about determining product pricing.

This session will introduce the topic of pricing, discuss different types of pricing models and give advice on how to go about determining product pricing.

Published in: Technology, Business
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Transcript

  • 1. Product Pricing<br />Siobhan McLaughlin<br />Sio_mclaughlin@hotmail.com<br />Or find me on Linked In.<br />
  • 2. To price, first you need to know what your product or service costs your company<br />Next, you need to understand your market dynamics<br />Then get to know your competitors<br />Decide on your marketing positioning<br />Now you crack open Excel and pull all of this information together<br />So you have a price but are you leaving money on the table?<br />You will need to do this on a regular basis<br />How do I price my product or service?<br />
  • 3. To price, first you need to know what your product or service costs your company<br />A full cost analysis is absolutely necessary.<br />Focus on the variable costs – those costs that you pay to make one item or serve one customer<br />All items on your Bill of Materials (BOM)<br />Costs associated with product assembly (per unit only)<br />Costs of all packaging including manuals<br />Costs of distribution<br />Costs of licences<br />Costs for product or service installation<br />Costs of acquisition (i.e. channel comp., direct marketing etc)<br />Costs of maintenance (i.e. hardware upgrades etc)<br />
  • 4. Next, you need to understand your market dynamics<br />How is the economy?<br />To the consumer, is your product category considered an essential or luxury product? (i.e. soap vs. hand-rolled Cuban cigars<br />How well understood is your product category by the consumer? (i.e. Personal Video Recorder circa 2001)<br />How much differentiation exists in your market? (coffee shops vs. gas stations)<br />How well-defined is your target consumer? (i.e. mom with 2 kids, >70K income vs. music lover)<br />After understanding your consumer, determine your market size.<br />
  • 5. Then get to know your competitors<br />Even if you think you don’t have any competitors, you do have competitors.<br />What is the pricing for each direct competitor to your product? A direct competitor sells basically the same product or service. (i.e. Internet from Bell or Rogers)<br />What is the pricing for each of your indirect competitors? An indirect competitor competes for the same share of the consumer’s wallet (i.e. going to the Jays game vs. Canada’s Wonderland)<br />
  • 6. Decide on your marketing positioning<br />If you are pricing for a well established brand, this may be decided for you.<br />What are your goals for this product?<br />Are you trying to push this product into a new category? (i.e. targeting premium whiskey to women)<br />Determine marketing positioning for each competitor<br />Example coffee - Starbucks - premium pricing vs. Tim Hortons – value pricing vs. McDonalds – low cost pricing<br />
  • 7. Now you crack open Excel and pull all of this information together<br />Develop a flexible pricing model that allows you to adjust all of these factors<br />Spend the most time on the “Assumptions” tab<br />This model contains<br />All the costs of your product or service<br />Market dynamic factors (i.e. assumptions on good economy vs. bad economy)<br />Competitive factors (i.e. assumptions on aggressive competitive activity vs. status quo)<br />Use these assumptions plus your market sizing to build sales forecasts<br />Target pricing<br />
  • 8. So you have a price but are you leaving money on the table?<br />Could you price your product higher and get the same demand?<br />Or are you priced too low and impacting the perceived product quality?<br />Is your product or service subject to elastic pricing? This means that the demand will go up or down as the price goes up or down. (i.e. HD Televisions)<br />Should you price high to limit demand? (i.e Beta mode)<br />
  • 9. You will need to do this on a regular basis<br />Continue to review your pricing because your market and competitive dynamics are constantly changing<br />Adjust pricing if your brand perception changes<br />
  • 10. Questions and Thank you.<br />

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