It is often that big businesses struggle with how to price their products and services. For small manufacturers and service providers it is even more of a puzzle as they tend to have fewer resources and tools to identify the best approach.
What happens when a small manufacturer introduces a new product? More often than not such company adapts the “cost-plus” pricing model, not as one of the tools to define its strategy, but as one and only approach to its price structure. This leads in ALL cases to money left on the table. In fact, “cost-plus” pricing approach seems to be the most popular singular model used by B2B manufacturers: surprising realization, especially given that all business schools advise the future executives against this price model … We will explore the psychology of why this happens in later blog posts.
Today, I would like to share a great article summarizing better than I ever could the science behind a well-thought-through pricing strategy. Compliments of Inc.com: http://www.inc.com/articles/2003/07/pricing.html