Pricing strategy usually follows one of four tracks. Bottom up: calculate the cost of everything that goes into making the product, and add a fair margin on top. Sideways in: analyze and adopt the price of competitors' products. Top down: target a demographic or economic segment, and engineer the product to meet that price. Or dynamic: use a complex, real-time calculation to gauge supply and demand, usually with the help of an algorithm.
What you almost never hear about is a fifth track, which I call story analysis: an analysis of a product's capabilities to fulfill a profound human need, to tell a story that gives your customers' lives richer meaning. In a world of abundance, what your product does for your customers is important, but not nearly as important as what your product means to them. And this second part — the story of your product — is what yields the greatest pricing power of all.
No comments:
Post a Comment