Pricing strategy · Marketing Strategy

Does changing sales price after launch make a big difference?

Armand Sepulveda Co-Founder & CEO at Dycap Media Solutions, Inc

March 31st, 2016

We sell camera automation software that comes on a PC, it is a B2B product.
We just signed an exclusive partnership with a manufacturer, who will place our product in the hands of many distribution companies. Currently our sales price to them is $3,000.00 but it is in their opinion that we lower the price to $2,000.00 but this makes breaking even much harder.

Ultimately the distributor feels that we will have more volume at a $2,000.00 price to them, so when it is sold to the end user it matches the current price of a similar product in the market. We figured if the market gives us feedback and we realize it's to high then we will lower it from there.

Wholesale Price $3,000.00 - Distributors Price $6,250.00 (What we want)
Wholesale Price $2,000.00 - Distributors Price $4,995.00 (What partner wants)

Is it easier to raise or lower prices after initial launch?
We've always been told that it's always easy to lower the price than to raise it but lately we have heard that lowering the price could signal to the market treating.

John Naylor Independent Media Consultant

March 31st, 2016

A fairly common approach is to use promotional pricing for an introductory period. This lets you test the lower price initially, and gives you the ability to "revert" to the higher price over time. The implicit vanishing lower price purchase opportunity may jump start sales too.

What competitive benchmarks do you have, if any? If there's already a camera automation solution out there for $4995 retail, you'd need some compelling reasons for purchasers to justify the extra $1,250.

Best of luck,

J.

Cynthia Hammersley Managing Partner at GiveRight LLC

March 31st, 2016

Armand I would listen to your distributor. They know their market. In return, ask them for a minimum order quantity over a set time frame. This guarantees a volume that generates cash flow. As you add features you can come out with a PRO edition that is priced higher. It will be straightforward to upsell an existing customer if you do a good job of identifying the additional features that bring them significant value. Cynthia Hammersley [image: Picture] Cynthia Hammersley cchammersley@gmail.com 602-524-9461

Steven Sheiner Senior Executive, Business Strategist & Entrepreneur

March 31st, 2016

It's better to launch at a price that makes you competitive than to wait until the market tells you it's too expensive and forces you to lower the price.  I'd listen to my distributor, chances are they have a better sense of what the market price should be than you do. 

Peter Jordan Revenue hacker for startups - journey to the $1 of revenue

March 31st, 2016

It is always easier to lower price after launch, every body knows that! It sounds like you have a lot of hands in the gross margin. Maybe you should remove one. Not sure what your GTM strategy is but you need figure out business model so that you get to break even as fast as possible.

John Naylor Independent Media Consultant

March 31st, 2016

ahem...

http://1beyond.com/store/autotracker-camera

looks like your product and retails at $4,995.

we should talk - your offering has synergies with mine.

J

Peter DBA Managing Partner at Pomegranate International

April 2nd, 2016

Have you figured out what the market can accept? What are you offering for this higher price to justify it?

It you are only competing with price it will be a bloodbath.

PHA