Re: The Psychology of pricing

From: Robert Brenner <Binfog_at_aol.com>
Date: Mon 09 Oct 2000 11:35:33 -0500

JOHN PICCIRILLO <john_at_tmlk.com> WROTE:
> Your pricing model should not be based on cost.

Hi John,

I disagree with this basis premise. All pricing models
should be developed knowing the cost to produce or the
cost to provide. Productivity also has a direct
bearing on price. Integrate cost and productivity into
the model and you have a baseline cost from which to
set price. It is then that you evaluate what
competitors are charging or what you think the market
will bear. This gives you a range within which you can
set your final price.

But without considering cost (even nonrecurring
development costs), you are going into the process
blind. You may be putting a lot of R&D into a product
that can never be sold for enough to cover costs and
produce the profit desired. Even information has an
associated cost. It takes resources to collect,
process, package and distribute this, and I believe
that you need to know how much you are putting into a
product so you can evaluate if it is a worthwhile
venture.

I'd appreciate reading the response of yourself and
others.

Robert Brenner
Brenner Information Group
"The Pricing People"
http://www.brennerbooks.com





Received on Mon Oct 09 2000 - 11:35:33 CDT