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New Product Development

Pricing

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The Six Discussion Questions +

1. What is incremental pricing and how does one go about using it?2. What is the release price and how would one go about calculating

it? (Include 6-8 components including ceiling and floor price).3. What is the difference between the release price and the

reference price? (Give alternatives to discounting during launch. Why is this important?)

4. What is the ceiling price and why might it not be used?5. What is the floor price and how would one go about calculating it?6. Is it always wise to go for the price that would result in the largest

market segment? (Clearly, pricing for the largest market share may not maximize profit. Why? When is penetration pricing a good strategy? Why?)

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What is the two-edged pricing sword?

Charge too much and the product _______________________.

Charging too little is even more dangerous!

1. Once a product hits the market it is almost ______________________

___________________________What is the main point of the paper?2. 80-90% of release prices are

__________________

When to start working on product pricing for a new product?

________________________________________________________________________

“Now we have the cold fusion machine what do we charge for it? Well, $99.99 seems good”

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Classifying New Products

New-to-the-World: Innovative products.

New Product Lines Additions to Existing

Product Lines: Extensions. Product Improvements: Repositioning: Existing

products targeted to a new market.

______________________

______________________

______________________ ________________

Later discuss how these pricing approaches compare to those from the 4 P’s Video?

Four P’s Video Layered Luxury Skimming Penetration

NP Pricing Incremental Release Reference Ceiling FloorPricing New Products

By: Michael V. Marn, Eric V. Roegner, and Craig C. Zawada

Published July 2003

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Q#1-What is the incremental pricing approach?

Starts with __________________________________________________ Adds enough to cover the new offerings

________________ Adjust that amount based on ______________When does it work Best? For ________________ & _______________________new products Incremental price can show you __________

_______________________ with some small

margin of return

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Q#2-How would one calculate the release price?

Begin by defining the __________ price. Use _______________________ and/or ______________________analysis. Establish the ___________________ Gauge the market’s _____________ Establish the ________________ price. Determine ________________________ . Launch

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Q#3-What is the difference between the release price and reference price?

They could be the same if there are no discounts or incentives offered

____________________________________________________________________________

“More than any press release, sales pitch, or catalog description, the ________________

__________________tells the market what a company really thinks a new product is worth

Release & reference price are ______________

____________ process NOT a way to come up with a price.

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Q#4-What are the pros and cons of the ceiling price?

It ensures that each ________ ______________will be considered.

However, there may be:

1. Insufficient ______________, or

2. it may leave ____________

____________ for competitors.

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Q#5-How would one calculate the price floor?

_________________________ pricing works here. Needs an accurate cost _____________________

_____________________________________________________________________________________________________________________________

Be careful of ______________________________ (for spreading of fixed costs!)

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Why is it not always wise to go for the price that would return the largest market segment? Q#6

Does maximizing volume maximize profit? The trade-off-____________________________

profits A low reference price may trigger ____________ The lower price won’t allow the ______________

_________________________________________ It could _________________ existing products (may be ________________________________

How do these pricing approaches compare to those from the 4 P’s Video?

Four P’s Video Layered Luxury Skimming Penetration

NP Pricing Incremental Release Reference Ceiling FloorPricing New Products

By: Michael V. Marn, Eric V. Roegner, and Craig C. Zawada

Published July 2003

04/19/23

Clarify the NP Prices Presented

NP Pricing Incremental Release Reference Ceiling Floor

Incremental price is _________

___________________ with some small margin of return

Release & reference price are _____________________________________ process NOT a way to come up with a price.

Ceiling price is the _______

____________________________and sell some product (hopefully at a profit)

Floor price is the ___________ _____________________ with some small margin of return

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Boil down the differences

NP Pricing ________________ ________________ ____________

Four P’s Video __________________ _______________ __________________

Pricing New Products

By: Michael V. Marn, Eric V. Roegner, and Craig C. Zawada

Published July 2003

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Other Basic Pricing Considerations and Strategies

New Product Pricing

Competition Based Pricing

Other Product Line/Mix Pricing Captive & Optional Pricing Bundling Discount Pricing Psychological Pricing Promotional Pricing

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Penetration, Skim & Luxury

Incremental

Other _________________________

_________________________ _________________________ _________________________ _________________________ _________________________ _________________________

_________________________

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What are some important pricing considerations during launch?

The first six months or year are critical to a new product. Discounting ___________________ the reference price. Alternatives are;

1. ______________________generally,

2. _____________________________ get free samples

3. Free _____________________

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When should penetration pricing work?

When high ___________________________________. (lowering price yields more or less revenue?)

_______________ When you have a ___________________

1. through ______________________________________

2. _________________________

HTTP://WWW.SLIDESERVE.COM/AWENTIA/PRICING-PRODUCTS-PRICING-CONSIDERATIONS-AND-STRATEGIES

A lesson from Slide Serve

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THE END