Slashing Prices
Some things, I don’t understand.
One eye is always on the competition. Their latest tactic: slash their price. They are practically giving away their application.
As with all businesses, there is usually a huge glut of people who buy initially and then sales start to taper off. The trick is to gear the marketing/advertising in such a way as to keep sales constant or, even better, increasing. One tactic many of these businesses follow: slash prices.
Why?
Maybe it is a misconception, whereby they believe that thousands of people who were on the fence before will suddenly slap down their hard-earned cash and buy their product. But if people are on the fence, maybe the problem isn’t necessarily the pricing but their perception of the product.
So when do companies slash prices?
Bananas normally sell for 79 cents per pound. When are they 39 cents per pound? Two days before they go bad. Fish is suddenly 50% off when you can start to smell it. Clothes are drastically-reduced when the company needs to clear out inventory to make room for the new fashion styles.
So really, why is my competition slashing their price?
They’ve got nothing new.
I smell opportunity.
>So really, why is my competition slashing their price? They’ve got nothing new.
Maybe, or maybe they are just stupid.
I was at Radio Shack and went in to buy a small device to record phone calls. It was $24.95. It has been discontinued. They slashed the price and it is now $2.00.
Why so cheap? It is a very specialized device. Is anyone going to buy it because it is so cheap? Not likely. Especially since the only way I knew it was only $2.00 is when I went to the checkout.
Not everyone understands how to price effectively. But just like those fish start to smell, I think you are right to smell opportunity. My guess is they are desperate.
Ned Careys last blog post..Apple iPod as a Business Tool
I try not to speak badly of the competition. But you may be right.
Of course what they have done is painted themselves into a corner. By lowering the price, anyone who purchases the application now will not be eligible for upgrades in the event they raise their prices back to their original starting point. This will alienate all their new purchasers.
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