Lessons Learned: Pricing
Case Study #1: The Inconsequential Add-On
Case Study #2: When Is a Sale not a Sale?
Case Study#3: Leaving Money on the Table
Establishing the initial price
Changing the pricing strategy
Setting a new sales price
Advice to entrepreneurs
establishing your price, talk to customers and others in the know to find
out what “the traffic will bear.”
you need to sell through channels (like the VARs above), my experience
says that you need to focus your efforts in getting the end user to “pull”
your product through the channel member. I essence, you will need to do direct selling to prime
the pump. Once the VAR is having some success (albeit because of your
efforts), he will be much more likely to sell your product.
get so enamored by the brilliance of your pricing strategy that you don’t
get customer confirmation before you make a company-wide commitment to it.
challenge conventional wisdom, accepted industry practices, and all other
assumptions. Rarely are they
as firm as you might first think.
margin is good.
is Associate Teaching Professor of Entrepreneurship at the Donald H. Jones
Center for Entrepreneurship at the Tepper School of Business at Carnegie Mellon
University. Previously he was president & CEO of the Future Fund, general
partner of the Pittsburgh Seed Fund, co-founder & investment advisor to the
Western Pennsylvania Adventure Capital Fund, as well as vice president, venture
development, for The Enterprise Corporation of Pittsburgh. An archive of this
series of articles can be found at my