Re: The Psychology of pricing
Robert:
Yes and no.
ROBERT BRENNER <Binfog_at_aol.com> WROTE:
> 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.
My position relates mostly to digital content. Setting
price based on marking up cost is dubious especially
when you are selling digital information b/c consumer
expectations are so different. If you are selling an
ebook, or access to a newsletter the cost associated
with the first copy is enormous. Eventually your cost
to produce another unit is driven to near zero. It's
because of the resulting competition that most people
have a tough time selling content online. Publishers
are finding that content plus value added benefits
(ease of access, duration of use, depth of content,
speed, etc.) are important.
> 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.
Get a range of what the market will pay before you do
the R&D. The profit I desire and the profit the market
will bear are very different. The Internet allows for
different pricing models not available off line.
Digital publishers need to take all into consideration
to set pricing strategy. (Imagine if my corner
bookstore had a micropayment system that charged me $1
to read a chapter from a new book)
John Piccirillo
TeamLink
"Largest Database of Team Generated
Sports Content on the Web"
john_at_tmlk.com
Received on Fri Oct 13 2000 - 13:58:35 CDT
