Pricing for Profit: How to Command Higher Prices for Your Products and Services

Author: Dale Furtwengler


by dmix   2018-01-15
It's a common misperception for the general public to value lower prices for higher end products and disregard how margins works in practice for 99% of the products they buy.

Meanwhile they think nothing of paying large margins on sub $20 products such as T-shirts. But the differences go well beyond that.

Luxury pricing is partially psychological but there is also real value in having a high margin product, allowing the company the luxury of hiring the best talent in the world and get the best supply line in the world, etc. Most mid-tier competitors are just mimicking the talent of top tier brands (otherwise pure low-end markets tend to stagnate as we've seen in many Japanese markets absent 'innovation'), and lowest tier is doing the best with what they can with the lowest quality talent + parts/supplies.

Even if Apple doesn't remain the #1 brand I still hope there remains a luxury brand that is pushing the envelope of the tech and software progress the way they (and Google Pixel recently) has been.

It doesn't benefit anyone when the only services or products left are on a death spiral towards low prices. That's a symptom of either a dead product/market or economy.

Not to mention the plenty of other factors (sometimes irrational) involved in non-low-end pricing strategies.

I haven't even touched on the more primary influences of high prices on preventing shortages and meeting consumer demand (which in absence is often the death knell of price capping critical markets such as food in socialist countries like Venezula).

I tell everyone to read this book before pricing their products and buying into the myth of 'success' by trying to low-ball your prices, it's both bad for your business and also bad for the industry if you're one of the few offering the product (because you'll likely die before it becomes sustainable):

TLDR: ignore the average persons comments on pricing, the lowest possible prices are not always the best prices, certainly for the entrepreneur/industry but also notably for the consumer/general economy as well - often for non-obvious reasons