Top7Business

Apprentice

How Should You Price Your Product?

PRICING is one of the 4P's in any marketing textbook.

Pricing strategies that would be on topic for this discussion might include:

How to test your product price possibilities Which Price will Maximize Profits? How do you find your PERFECT PRICE? Which segments of your client base should you test your price? Which products are easier to test pricing changes? How to not irritate clients while testing pricing. Software that helps you choose your best price Using online or Internet resources to narrow your pricing down Pricing policies and anything else related to pricing strategies...

Add your thoughts or tell us what results you got after you tested the price of your product(s)?

Just click "NEW TOPIC" or "POST REPLY" to add your comments.

Bald Dog

Apprentice

I think all product businesses should offer integrated services.

Years ago throughout the world we could see products dominating the marketplace. Apart from lawyers and doctors nobody really offered professional services.

Then something happened and people started expecting more personalised service and solutions that became harder and harder to cram into pre-created product packages. So, the service era was born.
Let’s take a quick look at what happened to one of the largest product vendors, IBM. After nine years at the helm of IBM, Lou Gerstner retired as IBM’s CEO. So, what happened during his reign? He started converting IBM, the vendor of “boxes” to IBM, a professional services firm.

So, you can see IBM’s biggest growth came from a service that had nothing to do with IBM’s core business. As a result of a mere afterthought, Gerstner added an extra $35 billion to IBM’s bottom line by inventing “IBM Global Services”. With this deed IBM became the largest professional service firm. As Business Week put it, IBM became the system integrator of choice.

And here is Gerstner’s comment on offering services, “You are headed for commodity hell if you don’t have services”.

So, how come Gerstner recognised the opportunity? One of the reasons may be that Gerstner is a former McKinsey & Co. strategy consultant, and clearly understood the value of services as a higher margin offer than “boxes”.

There was another obstacle Gerstner had to overcome. You see, IBM had provided services before Gerstner too, but the service was skewed by the lack of objectivity. The solution to every problem IBM encountered “happened to be” another IBM “box”.

Gerstner made the top executives to sign a document in which they agreed to provide the “best” solutions to IBM’s clients regardless of whether or not the solution is made by IBM. With this act Gerstner established objectivity, making IBM a reliable service provider.

The other example is Hewlett Packard, undoubtedly one of the finest engineering and manufacturing companies in the known universe. The in 2000 HP made a bid of $18 billion to acquire Pricewaterhouse Coopers’ consulting arm. Why would an already insanely innovative and obscenely successful manufacturing company would do that? As HP’s top dogs put it, “We can’t make in engineering any more. HP understood something many other companies failed to comprehend, that is, that good quality products are not enough. They are fine to enter the marketplace, but to make noticeable leaps companies need more.

And the examples are endless. Ericson, AT&T, GE, etc. All major manufacturing companies tend to outsource as much as possible, and focus on creating value-added services.

Any thoughts, guys?