Pitching the Price

APTE

Pricing is notionally the most powerful of all marketing tools.

In practice, marketeers rarely get much say in the launch price. Marketers are people who bring goods to market. Marketeers are people who plan how those goods should be brought to market. By the time they come on the scene, competition, development costs, and distribution limits have already boxed in the retail price.

If the take up is disappointing, there is very little the marketing team can do apart from introducing a special edition, either an enhanced program at a premium price or a stripped-down version at a discount. The response to these will provide hard information to enable management to judge in which direction prices need to move to optimize profits. However, these are tactical not strategic tools. With software, unit production costs start at next to nothing and grow to negligible. Almost all the costs stem from development. These have a way of shooting up from extremely expensive to more than the firm can afford. So the idealism that starts the entire project off needs to be reined in at a very early stage.

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