McKinsey & Company Pricing a New Product

This article gives great information on how to price a product that is completely new to the market.  It explains why a new product might be different to price than an existing one, as well as gives advice that can apply to pricing any product, as well as many different approaches that you can take. An important point the article argues is that it is much more difficult for a product to sell after it has been priced too low, as opposed to being priced too high (which is solved by simply reducing the price).

 

Applicability to Business

  • Many startups involve products in an untouched market
  • Pricing a brand new product may be difficult

 

Learning Outcomes

  • Determine if your product or service is in an untouched market
  • Analyze cost differences between your product and a similar one
  • Use the approaches stated in the article to determine if you should re-price a product

 

 

http://www.mckinsey.com/business-functions/marketing-and-sales/our-insights/pricing-new-products