New Product? Set Your Pricing Strategy First.

Set Your New Product Pricing First

We recently got a call from a company searching for help in establishing a pricing strategy for a new product. This is a common challenge for many companies. But, many make it even more challenging by waiting until just before launch to set prices. The company that called us for pricing strategy consulting was set to release their new product in three weeks. Yikes!

While most product development teams start with a focus on product capabilities and performance and end with pricing, they should move pricing strategies to the beginning of the process. Having a target price at the beginning allows you to perform a profit analysis before you invest heavily into product development. Will the product show an acceptable return or will it end up getting shot down due to low or negative margins?

Having feedback from the marketplace will help to establish a price point that will in turn help to determine what the target cost of the product will be in order to deliver an acceptable profit margin. Cost targets are helpful in the product development process as it guides engineers and developers in product design. If the product requires a component that exceeds the cost target to be successful then alternative components may be considered.

Dealing with the price issue up front for new products can save a lot of time and money and provide guidance in development to a profitable launch.

For more information on new product pricing, as well as a downloadable new product pricing guide, see our New Product Pricing Strategies page. To learn more about new product pricing, please contact a Price Point Partners pricing consultant at 330.342.0923 today to get started.