One of the most important issues facing companies both in the Internet space and otherwise, is how to price their products.
We've found that one of the best ways to help companies with the pricing problem is to first identify several questions they should consider. While this is not meant to provide an exact price for any product, it does significantly help ensure that many relevant issues are raised.
With this is mind, here are five questions you need to think about when pricing your product. At the end, we'll link you to related articles on our web site that also deal with pricing.
What alternatives do buyers have for solving their problem? Are they aware of these alternatives?
Customers who are knowledgeable about competing products will generally use the prices of these products as a comparison point. Of course, you have to remember that even if clear alternatives don't exist, customers may use any nearby idea as a benchmark. For example, they may put all downloadable software into the category "shareware" and expect a very low price from any downloadable software.
EASE OF COMPARISON
How difficult is it for buyers to compare the products of other suppliers? Can the benefits be easily observed, or must they be experienced first?