Keys to Successful Product Development #12 – The Right Price

How does your company set its prices?  Cost plus?  Price to market?  Some combination thereof?  We are often asked to conduct research to find the right price.  Sometimes price is the sole challenge and sometimes price is part of the larger puzzle.  Regardless of context, getting to the right price can make or break a product’s success.

So how do we find the right price?  The best way is to present the final product with its features in context against key competitive products.  Often that context is retailer-specific.   That is to say, we interview each retailer’s customers, showing them a product array that is specific to that retailer.  That probably gives you pause.  But what if our pricing is consistent across all retailers and channels?  Our research addresses that in two ways.  First, maximize your pricing to the needs of your most important retailer(s).  Second, adjust your products’ features and attributes to maximize your competitive position with each retailer.  A simple change of color might be enough to better your sales potential with a key retailer.

Here are a few pricing generalizations from our research that you may find helpful:

Price is important to everyone, regardless of income.  Only a small percentage of consumers in any category make decisions without regard to price.

  • Men are generally willing to spend more than women.
  • Millennials tend to want the best even if they can’t afford it, so they will do without rather than buy second rate on something they really want.
  • People spend twice as much on items purchased as wedding gifts as they would on that same item if they are purchasing it for themselves. (see our HomeStats™ reports.)
  • Despite the low prices that can be found online, our HomeStats™ reports find that average amount spent online is higher than average amount spent in store on most housewares items.

 

Please call or email today for more information about how our research experience on pricing can help you to maximize your sales and profitability!