Model #3 Price to Kill
Large companies will often price a product at a great loss,
just to drive smaller competitors out of the field. In many cases, it’s not
strictly legal. But who has the resources to fight gray-zone cases?
Model #4 Price to Lose
Do you know the irony of the “price to penetrate” and “price
to kill” models? Most of us do neither... or both, depending on how you look at
it. Let’s say that you price to penetrate -- you want to pick that price that
finds the most customers, right?
Let’s say that you top price -- you want to pick the price
that makes the most money, right? Unfortunately, most business people tend to
skew a penetration price too high, trying to make more money. Likewise, top
“pricers” tend to worry about scaring too many people off.
Don’t price in that in-between “No Man’s Land.” Decide
whether you want to price to penetrate or to get the top price.
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Pricing Isn't All Logic. Discover The Hidden Pricing Tactics You Can Use To Increase Profits!
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Now apply this information to your business. Ask yourself
these questions…
1) What was my goal when I chose my pricing model
originally?
2) Knowing where I am now with my business, should I have
chosen a different approach?
3) What are the pros and cons of my pricing strategy?
4) Which model do I see myself using three months from now…
with confidence?
Pricing is a complex topic for almost all of us. The key is
to look at it from different angles. Each new perspective gives different
chunks of information to increase your understanding of pricing theory and how
it affects your business. Finished with the reflection exercise? Good timing.
The next “angle” is stepping up on the podium…
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