Pricing new products is a critical and often overlooked part of the business cycle. Many companies that are quick to launch new products or implement new supply models often neglect pricing structure. By launching a new product with very high pricing at the outset, they may be driving buyers away.
Pricing new products in the early stages can be tricky because pricing is affected by many factors beyond initial sales and shipping costs. These include the supplier’s cost of goods order and their margin, their break-even point and average shipping times, their profit margin, and their customer’s perspective on the final price. By effectively pricing new products in the early stages, one can control these factors and use them to create an advantage. The most effective way to do this is to leverage pricing leverage. This refers to the ability to control costs while .maintaining or increasing customer demand