One Step Ahead

I often get asked for advice about pricing products - especially electronic products that have negligible unit cost. Is it better to price them low so that more people buy them, or to price them high so that you make more money per sale?

One of the most important factors is your market reach. If you have the ability to reach lots of qualified customers, then you can set a lower price and rely on volume to make your profits. However, if you can only reach a small market, then you will get fewer sales, so it might be better to make more money from each sale.

Here's an excellent example...

I'm a cricket fan, and I've been waiting eagerly for the Test series between Australia and India - virtually the world title fight. ABC radio is covering the game live, but you don't get full coverage. Fortunately, Cricinfo is providing live broadcasts over the Internet - for a price. Cricinfo has a huge following world-wide, especially in cricket-mad India, so they can afford to charge a measly US$3 per Test match (or US$8 for the entire series) for this service. It just goes to show what you can achieve when you have such a large list.