Product/Service successful Pricing

One of the most important aspects of Marketing of a new product or service is its pricing. Traditionally pricing was based on multiples of cost which would allow for a reasonable profit margin. While this is one approach, it tends to be too simplistic leading to lower margins than can be achieved. Pricing needs to be driven first and foremost by analyzing the value of the service/product to the end user and followed by knowledge of competitors' prices which often could set the glass ceiling on expected prices.