Pricing: Rough Thoughts

Was wanting to write a note on pricing for quite some time. Realised that it is too vast a topic. I intend to begin a series of notes on that and here is a rough note on the different things that came to my mind when I thought of writing something about pricing. Would try to take each of them in some depth and with examples.

Feel free to put comments on what more could be covered.

Deciding the prices

How much money did I help the customer make?
How much money did it cost me?

Revenue targets?

Service only
Product only

Customer Facing: Over pricing and Underpricing
Product/ service Perception

Payment terms:
discounts, warranties, guarantees,credit policy

Money back

I will deliver X by Y date

Make a spreadsheet with:
Investment: split that into annual dep numbers or replacement capital

FIxed cost: operating costs

Revision of prices? Revision of margins?

How to raise prices?
New packages/combinations for increased margins

reducing costs:

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One thought on “Pricing: Rough Thoughts

  1. I feel pricing should be based on following considerations…

    At what price your customer is willing to buy/ afford you product or services???
    What value doest your customer perceive out of it??

    You can price your product at a premium if value percieved is higher than the cost. In turn you can use more money in improving the product.

    If your cost is higher than percieved value, you need to reengineer and rework your product/services to bring your cost down. Price your product according to your customer’s requirement. For example, if your customer can shell out Re.1 for the shampoo, bringing out Re.1 sachet is the best pricing startegy.

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