 |  |
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
The Pricing Masters... an intensive 5-Day e-mail course on
finding the Perfect Price that will maximize your profit.
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
If you have a friend who would benefit from taking this
course, please pass this on.Or tell that person to receive
the 5-day course by sending a blank e-mail to...
tpmsalliesunme@sitesell.net
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
Refer to this course whenever you price new products and
monitor or upgrade existing ones. Print each e-mail out,
pour yourself a beverage of choice, bring along a pen to jot
down some ideas, and take it all to your favorite sofa. This
is serious stuff -- pricing makes or breaks many products.
So get into a comfortable spot for maximum learning.
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
Pricing Masters Course 202
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
Welcome back.Had a chance to reflect on your own personal
4P's of marketing? Product. Place. Promotion. Price.
So many inside and outside factors in that big picture,
right? You need a strategy for every part of your business
operation to guarantee success -- the pieces of the
e-commerce puzzle have to fit together.
We're going to zero in on pricing strategy over the next
four days. As I said yesterday, the right price is crucial
for your Net business. You need to be able to set the price
of your product or service with clarity.And you want to
see the results of that decision *increase* the income side
of your ledger.
---
Today, we will look at business/pricing models. Your chosen
model provides the framework for your pricing strategy. Your
product and the marketplace are the main joints, so to
speak.
One popular pricing strategy is "Price to Penetrate." Your
objective here is to penetrate the market fast and deep.In
other words, sell as many units of the your product as
possible. So, you set your price low.
Use this strategy to establish a powerful position in the
market quickly.Why?The basic goal is to acquire as many
customers as quickly as possible. In other words, you are
"buying market share" to establish dominance.
You may also be sensing that more competition is on the way.
Market dominance is particularly relevant when you consider
that shopping (and buying!) on the Internet is about to
explode over the next two years... all over the world, not
just in your neck of the woods. You want to have a
well-established online presence before the throngs of new
customers are grabbed by other businesses.
-----SIDEBAR-----
Price to penetrate was my model for Make
Your Site Sell (MYSS!), the BIBLE for making a site that
sells. I set its price (US$17) at least one tenth of what
its major competitors were charging... even though it
*overdelivered* in every way.Please see reviews at
http://www.sitesell.com/testimonials.html
-----SIDEBAR-----
Why choose this model?For the same reason that I did...
Because you recognize that each customer has a lifetime
value.That value can be hundreds of times greater than
some small profit you might make on the first sale of your
product.It's so much cheaper to keep a customer than it
is to recruit a new one.
But you have to be able to KEEP those customers. Take a few
moments now to jot down how you take care of your
"first-time" customers... how you turn them into the
"life-time" variety.For example...
Do you deliver high-value-for-the-dollar? Great customer
support?If you don't have an approach to developing your
penetration-priced customer into a lifetime one, you're
wasting your time. "Customer Stickiness" is key.
-----SIDEBAR-----
The Make Your Price Sell! (MYPS!) Manual gives a quick
primer on how to do this effectively. This comprehensive,
extremely useful Manual is free when you order MYPS!, our
innovative, patent-pending server-side product.
MYPS! is an exact, super-fast, and scientific system to find
your product's Perfect Price. Together, the software and
the manual are the winning combo to pricing with complete
confidence.After you get your "Pricing Masters" degree,
get your PhD.:-)
http://myps.sitesell.com
-----SIDEBAR-----
The oppositepricing strategy to penetration is called
"skimming the cream." Here, the price is deliberately set
high, in order to reap large profit margins.This is
usually at the cost of losing a large number of customers.
High price tactics are also known as "selling off market
share."You gain income from those high profit margins, in
exchange for having a smaller and smaller percentage of the
market buying your product.
This model works well if you have a proprietary product.
Some customers will pay more for uniqueness, especially if
good value is perceived as part of the equation.
Typically, two scenarios work with high-pricing...
1) When you first launch a product and want to recoup all
the R&D quickly.Good examples are consumer electronics --
the prices for DVDs were sky-high when they first hit the
market.Now they're coming into reasonable range.In a few
years, a basic DVD will be commodity-priced.
2) "Prestige pricing" -- Mercedes-Benz, Tiffany's.Sometimes
an example is worth 1,000 words.:-)
---
Remember when we talked about price risk yesterday?Well,
"skimming" carries some important risks...
Big profit margins attract competitors who want a piece of
the same pie.The only difference though... they are
willing to shave dollar signs off to get the eye of that Web
customer with the open wallet.
The second "speed bump" has to do with public relations.
Your business will not survive if customers feel that they
have been "taken for a ride" -- an expensive ride at that!
Apple's Macintosh was a good example.Their customers never
felt ripped off, but they lost serious market share during
the late 80s and early-mid 90s that almost killed them.
---
The final business model, price to kill, uses the "loss
leader" approach totally. Here, profit is definitely not
the objective.No competition is the goal, at whatever cost
it takes.It's *not* for the faint of heart. In many
cases, itÕs not even legal.But who has the resources to
fight gray-zone cases?
---
OK.Three distinct business/pricing models.Which one
matches yours?For small-to-mid-sized businesses, your
choice is usually between penetration pricing and high-
pricing.
Don't make the mistake of doing a "little of each" --
you'll end up in a fatal valley between the two. Of course,
to avoid the valley, you have to know where the peaks are.
And that's the job of MYPS!But, before you start on your
PhD (Pricing Higher Degree!), let's finish your Master's
course.:-)
-----
Before tomorrow's session, I want you to ask yourself these
four questions...
1) What was my goal when I chose my model?
2) Knowing where I am now with my business, would I have chosen
a different approach?
3) What are the pros and cons of my pricing strategy?
4) Which model do I see myself using three months from now?
With confidence?
While you are musing that over, I'll quietly slip out.
-Ken
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
TO UNSUBSCRIBE
To unsubscribe, send a blank e-mail to...
unsubscribetpms@sitesell.net
NOTE: You must send it from the same e-mail address that is
subscribed to this 5-day course.
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
Written by Ken Evoy, M.D.
President of GoodBytes Information Products Inc.
(c) copyright 2000 GoodBytes Information Products Inc.
Perfect Price and Teeter TM GoodBytes. MYPS! patent-pending.
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
<<<--- Previous Lesson Next Lesson --->>> Return to Success Training HERE! | | |
©Copyright Business Success Experts.com
A Division of The Workplace Moxie Network - All Worldwide Rights Reserved
| | |
