| It's fairly easy to price against perceived worth of labor, but it isn't really helpful neither in competitive, nor in emerging markets to base pricing decisions solely on it. Concepts behind all pricing models are fairly simple and don't require overly sophisticated math. Instead, they require sober look into 4 variables: - Replacement cost: what would it cost to replace your service/product with something else? - Market price: what others are charing, charge around their price. - Cashflow/Net present value: if something you're producing has long-term economic impact, you may price not only based on actual value of your offering, but on long-term profit your offering will generate. And, in some cases in enterprise industries, this is the only way to reasonably justify your prices. - Value-based pricing: this is fine adjustment mechanism for everything you've figured during previous three stages. Think who's target audience for your product, and if there's something which makes your product more valuable for them than the rest of the market - price it accordingly. Simple example - luxury DSLRs (whose sensors, firmware and lenses are just as good as professional ones, yet luxury casing and a good brand name makes them significantly more expensive). (I'm not a salesman, I'm an engineer, yet I had to sit through decisionmaking sessions about pricing services in 2 different companies over last decade, and found them very amusing - if you get to the core, the ideas are very simple, they're just surrounded by plenty of bullshit bingo and lingo). |