• Save
PCT2010 - Product Pricing
Upcoming SlideShare
Loading in...5
×

Like this? Share it with your network

Share

PCT2010 - Product Pricing

  • 2,230 views
Uploaded on

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.

More in: Technology , Business
  • Full Name Full Name Comment goes here.
    Are you sure you want to
    Your message goes here
    Be the first to comment
    Be the first to like this
No Downloads

Views

Total Views
2,230
On Slideshare
1,555
From Embeds
675
Number of Embeds
6

Actions

Shares
Downloads
0
Comments
0
Likes
0

Embeds 675

http://productcamptoronto.wordpress.com 555
http://www.productcamp.org 53
url_unknown 40
http://productcamptoronto.ca 20
http://www.slideshare.net 4
http://productcamp.dev.lezgro.com 3

Report content

Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

Cancel
    No notes for slide

Transcript

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