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Pricing your product

Discussion in 'General Entrepreneur Discussion' started by sparechange, Aug 11, 2017 at 11:07 PM.

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  1. sparechange
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    sparechange Bronze Contributor Speedway Pass

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    What are some methods you use? If we sell a high ticket item we eliminate the lower/middle class market, and lower ticket item would alienate the upper class from purchasing your product

    example...{ferrari & honda} {mcdonalds & starbucks} the coffee is better at mcdonalds btw... *fact*

    the same product but two completely different customers..
    just a tickle i had in my brain!
     
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    AllenCrawley Legendary Contributor Staff Member Read The Millionaire Fastlane I've Read UNSCRIPTED FASTLANE INSIDER Speedway Pass LEGENDARY CONTRIBUTOR Summit Attendee

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    This may help...
    Notable! - Pricing and Psychology
     
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    Def read Kolenda's thread and article. He knows his stuff.

    Your examples though, they go way beyond simple pricing and into branding, limited supply (Ferrari), operational differences, and Productocracy.

    Like Starbucks versus McDonald's.

    I agree that McDonald's coffee is better, but at the end of the day it is not a STARBUCKS.

    You don't see memes about McD's coffee. You don't see girls posting selfies with McD's coffee.

    You don't buy a "coffee" at Starbucks. You buy a "Starbucks Coffee" at Starbucks. People identify with it, they own it, it's part of them.

    "I'm a Starbucks coffee drinker" is, well, part of who they are.

    Yeah, they both sell coffee. And coffee is a commodity so it's a difficult space to be in.

    But are they really the same product? I would argue that most people think they are NOT the same product. People are willing to pay more for the privilege of buying from Starbucks thanks to the perceived value of their brand.

    Proof it goes beyond simple pricing: Could McD's get away with matching Starbucks prices? I don't think they could, because they don't have the same brand perception.

    Plus, it's more expensive per cup sold to run a Starbucks than a McD's, so McD's can get away with cheaper prices.

    Man, I have been very bloviated with my posts lately haha (Off-Topic - WOTD: Word of the day.)
     
  6. G-Man
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    inputchip Bronze Contributor Read The Millionaire Fastlane I've Read UNSCRIPTED Speedway Pass

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    I love the psychology aspect behind pricing products. It's like the story of the vodka (Grey Goose?) that doubled their pricing and their sales exploded. Sidewalkers love to believe they are buying premium or luxury items and living the appearance of a luxury lifestyle. I am happy to cater to people with this mindset.
     
  8. sparechange
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    perhaps sticking with the higher price would be the better option? after all if we cater to the 1% we need to make less sales to hit our financial targets.

    if you take the 1% of 7 billion..id say theres more but lets stick with this number for now, theres 70 million+ multi millionaires in the world alone! my problem though is my market is more highschool, college and uni students. im thinking possibly i could come out with a high price at first and see if i get bites on the fishing rod, then reduce if no bites. maybe this is my best option.

    a bit wishy washy on my demographic, have alot of rich and poor here in vancouver.. also been considering different product versions, similar to how BMW has the 3 series and M3+ series. brainstorming out loud here.
     
  9. sparechange
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    sparechange Bronze Contributor Speedway Pass

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    A Defense of Anti Social Social Club • r/streetwear

    was reading this earlier, basically a company that produces crappy hoodies and overcharges..they have a huge cult following in vancouver, lots of chinese youth wear this stuff, pretty crazy how they spend money on clothing and stuff..went into a chinese store and you can get this one clothing i forget the name...but anyways shirts are about $200+ very common to see these kids wear name brand stuff. come to vancouver! we have lots of consumers here.
     
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    It all really depends on what your product is. For example a rule of thumb that I have heard in software (mostly b2b saas) is to price your product at 10% of the value given to the customer. For example, if my software saves you at least $1500 a month in cash and time, I might start my basic pricing plan at $150 a month. When your customer gets a large ROI by purchasing, it gives the customer no reason NOT to buy your product.

    Regardless of your products, you can look and see what your competition is doing. How can you skew value in your favor to justify charging a premium?

    It is acceptable to ask your potential customers how much they would pay for something. Simply give them a number you are thinking and judge their reaction. Remember, the greatest validation is people putting money where their mouth is and actually buying the product.
     
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    Do you have the ability to create multiple versions of the same product? Ex: base, intermediate, and deluxe?

    Make sure that's actually a problem. And if it is, there's a solution there. When I first read this line, I immediately thought back to when I worked at the mall and what flew off the shelves for this demographic you just mentioned. It doesn't have to be their money that purchases the product, which means you could indirectly target that audience by going through the parents/relatives/friends
     
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    yes im considering different versions, similiar to the bmw model, (3 series) (5 series) (m-series) etc