Tuesday, March 25, 2014

How to Price and Design Products for Profitability

ScottDavisEffective product design considers the trade-off between what a customer is willing to pay for various potential features and what it costs to provide them.  When designing a product line with a customer orientation a manager should contemplate which market segments will be the primary targets and what each segment will be willing to pay for each set of features.

How do you develop a product line that achieves the desired market penetration while minimizing unprofitable cannibalization?

To do so successfully, consider different approaches to pricing new products such as skimming and penetration pricing.  Improve product line and product mix profitability by using bundled pricing. In addition to cannibalization – consider competition and customer psychology in designing and pricing product lines.

During the Pricing and Designing Products and Product Lines for Optimal Results workshop at the PPS 25th Annual Pricing Conference in Chicago, Scott Davis will review the primary ways of estimating customers’ wiliness to pay for product features. Valuable for product and brand managers responsible for designing and pricing product offerings; this workshop includes interactive discussions and opportunities to analyze simplified case studies to understand how to apply the key concepts with the assistance of spreadsheet models.

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