Setting + Adapting Price: Finding the Sweet Spot in a Changing Market

Pricing is one of the most powerful components of marketing. Set it too high, and there’s a risk of alienating potential buyers. Set it to low, and you may undercut your value. The art lies in both setting the right price and adapting it over time to reflect changing market conditions, customer behavior, and business goals.

Setting Price: Start with Value

When establishing prices, companies often use these three models:

• Cost-Plus Pricing: Adding a margin on top of production cost.

• Competitive Pricing: Companies benchmark against competitors in the same

  category.

• Value Based Pricing: Anchoring the price to the perceived value of the product for

  the customer.

Adapting Price: Remaining Flexible

When markets evolve, so should pricing. What worked when the product launched, may not work six months after. Product competition, shifting demand, and economic factors contribute to how pricing is affected in the marketplace. Companies can adapt to pricing by:

• Testing Promotions: Short-term discounts can reveal price sensitivity without permanently lowering value.

• Dynamic pricing: Companies, like airlines and rideshare apps can adjust their pricing in real time based on demand.

The Takeaway

Adapting price is the secret to staying relevant in the ever-changing marketplace. It’s important to listen to customer feedback, be in line with competitor benchmarks, and protect your value by responding to the changes in the market.