Ken Uchikura Newsletter Vol. 155 A Story of Pricing
Nov
17
A Story of Pricing
When you develop and launch a product or service, it is difficult to know how to set the selling price. We often think about the price by comparing the product's functions with those of other companies. At the same time, we also consider the balance between supply and demand in economics. Recently, there has been a shortage of various products because of the inability to manufacture microchips. The demand for these products exceeds the supply, which itself causes a price premium when selling the few available products. This is most evident in the automobile industry, where it is required to display the manufacturer's retail price using the MSRP method. In short, there are so few new cars to sell that the point of sale is to add to the MSRP.
Today, I would like to talk not about this particular environment, but about the case of determining product prices. I believe that there are two types of products: those that are unique and highly specialized, and those that can be used by anyone. Products that are unique and highly specialized can be sold at a high price, while products that can be used by anyone can be priced to sell.
It is important to consider whether what you are selling is a unique and specialized product or something that can be used by anyone, and set a price that is appropriate for it. It is not enough to sell everything at a low price. Also, if it is a product that can be sold to anyone, it is a good idea to think about what kind of added value you can provide within the product before lowering the price.
Kenichi Uchikura
President / CEO
Pacific Software Publishing, Inc.
ken.uchikura＠pspinc.com
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