The other day I was talking to an entrepreneur on how he prices his products. He had an interesting insight to offer me. I price my stuff close to where the costliest in the market is, he confided.
And there I was expecting the low down on his costing mechanisms, bill of material and much more! Why do you do it that way, I asked. Why don’t you link it to your actual costs? Because I do not want to come across as cheap, he confided. |
| Krishna Kumar |
One of the biggest dilemmas faced by businesses is how much to price their products for. Which is that sweet spot at which the queue of buyers will not end, but above which the queue will simply dry up? Obviously, there is no simple formula that can tell you that point. Also, in a world that often looks at the price tag to determine brand value, there is no rule that your price should be a function of your costs or that you should price your product such that more people will buy it; or even that prices should be the same anywhere. There is no rule even that there should be a price for your product. There are may who give away their products for free either as a trial or to sell add ons and services at a price.
Which is the model that fits your requirements the best?
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