possible ways consumers can acquire the product. Don't limit the analysisto online distribution channels.Competitors may define one’s price range. In this case, one can pricehigher if consumers perceive the product and/or brand is significantlybetter; price on parity if the product has better features; or price lower if the product has relatively similar features to existing products. Aninformation client faced this situation with a premium product. Its directcompetitors established the price for a similar offering. As the third playerin this segment, its choices were price parity with an enhanced offering ora lower price with similar features.
Examine market pricing and economics.
A paid, ad-free siteshould generate more revenue than a free ad-supported one, for example.In considering this option, remember to incorporate the cost of forgonerevenue, especially as advertisers find paying customers more attractive.To gain additional insight from this analysis, observe consumers interactingwith your product to better understand their connection to it. This can yieldinsights into how to package and promote the offering that can affect onpricing, features, and incentives.
Test different price points if possible.
This is important if we entera new or untapped market, or enhance an offering with consumer-orientedbenefits. To determine price, MarketingExperiments.comtested threedifferent price pointsfor a book. It found the highest price yielded thegreatest product revenue. Interestingly, the middle price yielded greaterrevenue over time, as it generated more customers to whom other relatedproducts could be marketed.
Monitor the market and the competition continually to reassesspricing.
Market dynamics and new products can influence and changeconsumer needs.