Question

Topic: Strategy

Unique, High Demand Product. Pricing Consideration

Posted by Anonymous on 12/21/2011 at 1:31 AM ET 125 Points
Hi,
we have a new unique high demand product for a niche. It has a very good product to market fit (people begged that we produce it and many are waiting for the release). That's all great.

We are new in this market though and we want to establish us so the question is now how do we price it. It is unique and hard to copy. People really feel they need what we offer so a skim pricing strategy comes to mind. High price for the high value people get out of it.

Then again we are new in this market and would like to gain traction for less unique follow up products, so pricing it cheaper might give us more reach and more profits in the long run.

Right now my plan is to offer three segments each of 100 potential customers who showed interest in our product three different prices to find what works best.

Then again the high price might give us more profits now but less traction in the new market, which can mean less profits in the long run.

I'm not a professional marketer but have been running my own business quite successfully for the last 5 years so I would love to hear some thoughts on this.

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RESPONSES

  • Posted by crisanp on 12/21/2011 at 3:13 PM Accepted
    if your product is unique, it's very hard to compare the price with nothing.
    do you have a feedback from your clients ?
    are they happy when they buy at this price?

    if you have this answers please post it and i'll posted the new ideas
  • Posted by Peter (henna gaijin) on 12/22/2011 at 1:13 AM Accepted
    Do you know how much value the product is to a customer (in dollar terms)? Calculate this and you have the maximum possible you could every get (but wouldn't likely get). Your price has to be below this.

    If the product is really hard to replicate, as you say, then going for a high price at first is generally the way to go. You get those people who are willing to pay high prices at first. And then you slowly lower the price, increasing the numbers you sell, but at slightly lower margins.

    If the product can be replicated or you have competition already (may not be exactly other same, but meets the customer's needs - for example, if your product is the first cola, orange juice and water are both competitors, as they meet the customer's need to quench thirst), then these have to be factored in when setting a price. Generally, having competitors would lower the price you can get.
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