SPMG April - May 2012 Newsletter

PRICING TO CUSTOMER EXPECTATIONS

Article in the World Economic Journal - Nov. 2011

Written by Michael Hurwich and Julia Reshetnikva                                                                      

(EDITED 2012)

Price consulting is mostly all about understanding what drives purchasing behavior. In interviewing a thousand people we can find various commonalities. For example some people may have similar value expectations for a product or service. Perhaps, for some the driver is brand name, while for others it could be price. After collecting appropriate data, we can then construct a value proposition for people seeking brand loyalty.

Measuring the psychology of purchasing behavior is very important. With so many competitors worldwide, it is very important to understand how customers trade value for price. Furthermore, a 1% change in price typically represents an 11% increase in net revenue.

Price is a very powerful lever to improve profitability.

STRATEGIC PRICING MANAGEMENT:

Previously, adjusting price was a decision left to only one individual (known as a "Price Czar"). Usually this individual works in the Finance or Accounting department. This person's unilateral decision was basically the one adopted by the company to establish the price. However this specific process represented an inside-out approach. In those days, companies always looked at cost involved in producing a product or providing a service to a customer. This traditional form of pricing involved adding a fixed-markup to a product's cost to ensure a target margin. From  here, companies traditionally went to market with a margin markup strategy. If customers found the price unattractive, the company would be forced to discount their products and services or fear a rapid decline forecasted sales.

Today, most companies in well developed countries have adopted what is commonly known as value-based pricing strategies. This outside-in approach is more complicated but much more effective. The price is not set from inside the company, but rather is set in learning and understanding a customers use of products and services and their willingness to pay for the derived benefit of the product or service. Some companies have known to measure customer decision selection criteria and purchasing behavior by the hour or minute to determine the price-benefit equation. This tactic is known as dynamic pricing.

THE ROLE OF THE PRICING CONSLTANT:

Pricing consultants are typically used today to look at the historical data of unit sales of companies by reviewing the nature of what has been sold in the past. The process is typically known as regression or cluster analysis and is used to determine the nature of purchases and the consistency of pricing performance. Past volume and prices obtained can often be used to determine future prices in the absence of external market research. When historical data is insufficient companies often conduct a primary field research by talking to a select group of respondents with prior experience using a similar product to determine the demand based on the suggested price and value proposition of the new product or service.

Price affects everyone. There is not a company in the world that doesn't talk about price at some point during any given day. Interestingly, most of the focus of price consultancy firms is not around price, but rather in understanding a company's value proposition to customers. Price is merely the reward for creating, capturing and communicating value into the marketplace.

THE RESEARCH PROCESS (McDonalds Case Study)

McDonalds was an interesting client, in that they asked us to review their pricing and value proposition for the Big Mac and Happy Meal for the US market versus existing competitive products with equivalent value propositions. In the USA the Happy Meal was $5.99. McDonalds sought to understand if they have the right price relative to competitors.

We [SPMG] decided to use a customer segmentation model to understand the McDonalds customers pricing pain threshold relative to their value proposition. There are 4 types of customer segments. Price sensitive customers segment usually representing 33% of the marketplace. The convenience customer is typically represented by 15% of the market, while loyalty customers represent 25% of the market. Finally the value customer segment is always looking to measure value in relation to price.

The research for McDonalds unveiled different price thresholds for different customer segments using diverse delivery channels. McDonalds conducted the price research across the contiguous United States and Canada with 1600 customers. What was interesting is that most customers represented by 75% of the sample didn't even know the right price of the Big Mac and Happy meal. They actually thought that it was 20% higher. The message here: if customers fail to know the right price, it is implied that McDonalds was leaving money on the table. If customers didn't know the price that they suggested, there is a lot more value as perceived by the customer than the price that was being charged. McDonalds had to rethink their price-value strategy and what to do with their price.

There was a different price-point threshold across different channels. Because McDonalds avoided charging different price across their four channels we took an average of all the channels and arrived at a new price that would be optimal for drive-through clientele as well as for customers that dined-in.

CONCLUSION: The benefit to McDonalds was roughly $80 million dollars to their top-line revenue merely by adjusting price to more adequately reflect current market and competitive conditions.

PRICING EXCELLENCE

Science-based segmentation utilizes data analysis and statistical methods to group customers into "significantly similar" groups. The object is to create segment optimized pricing given particular buying behaviour of that segment.

Today companies use sophisticated pricing tools to derive price and measure the psychology of purchasing behavior in what is an important and key attribute of price-value consulting.

Another tool used in pricing is called Monadic testing which only tests price in the absence of other product or service characteristics. In Monadic testing you are attempting to test different price points. If you get a large enough sample you can determine acceptable price points that represent the majority of market share.

Another useful tool that is commonly used is called Price-Value mapping. This tool shows your company how a customer evaluates specific product and service attributed to price. The tricky part of constructing a Price/Value Map is estimating the product & service value to the average customer. We recommend the identification of a handful of product or service features that your customers care about most and then try to determine. You would plot the price and value on a price value map. The Price-Value map is one and most important, most often used pricing tools in the industry today.

Restaurant Pricing - Some "Food for Thought"

By Peter Maniscalco

My wife and I recently visited one of our favorite local restaurants (a "Bar & Grill" as it's called).  We've been loyal customers for several years.  It's a nice place, always busy with good food, service, atmosphere and, reasonable prices. Clientele is mixed (i.e. blue and white collar patrons)as the establishment is located in the suburbs but, not close in proximity to a major city either. Sounds like a great place so far, right?  Well, that was the case until about six months ago after we had some new priced "food for thought".

What happened?  Well, whether it was due to the change in economic conditions over the last few years or not, the Bar & Grill decided to make some changes.  The food is still good with same portion sizes and the atmosphere is still nice, however, the grill extended the length of the bar.  Okay, so they can now seat  several more customers at the bar.  I see the improvement. What we noticed even more was a complete change out of staff members.  And yes, as a result there has been a noticeable decline in the level of quality service in addition to (are you ready for this?), selective yet significant price increases in the menu!
Examples include a two dollar increase for a salad, a one to two dollar increase for a cocktail, and a one to two dollar increase for a dessert.  This all happened within a month or so of completing the bar "renovation".
Well, we all know commodity costs have increased in the last couple of years or so but did the Bar & Grill inadvertently "overlook", ignore, or just plain screw up their value proposition here?  The staff, according to what we understand from an inside "source", is much less costly compared to the prior staff.  All right, so now their variable costs have decreased.  But, the additional costs incurred were for the extended bar, a one-time fixed cost investment!  My "Food for Thought?"  The food/drink price increases are significant,  there is a decline in the level of quality customer service but quality of food and atmosphere are still solid. However, from what we've heard and observed, the level of business has dropped noticeably.

The key points missed here by the owner are that a value proposition contains more than just the price element; pricing is not solely just a function of costs; and to be successful one must take into consideration the target market/customer base.(i.e. segmentation)

Alternative solutions?  Sure.  Here are a few quick and obvious ones that the owner(s) could have taken.

1. Bar & grill could have held its prices, for at least a little longer anyway.  Please don't let me as a customer think your price increases are simply a way to help you cover your sunk cost investment (i.e. extending the length of the bar).  Since there was an "overhaul" of the staff which reduced its variable costs, by holding its prices the Bar & Grill could probably still maintain its margins even in light of commodity cost increases.  Or, an option would have been to implement smaller and selective price increases, if the owners felt compelled to do so.  
2. Bar & Grill could have implemented a less obvious price increase by "downsizing" the portion of its food and drinks, instead of the quite more noticeable price increases.  
3. Instead of a mass overhaul of its staff, the owners could have taken a selective approach in terms of reducing its variable costs.  For example, the owners could review their payroll staff and re-balance their hours and schedules based on employee labor expense differences.   

Will we frequent this establishment as often?  Most likely not. I'm not sure where the value is now, since we(and other patrons I'm sure) observed quite noticeable price increases, an obvious decline in quality customer service and a feeling that the restaurant lost sight of the customer.  Maybe the Bar & Grill will recognize that its value proposition is not(or should not be) just all about recovering its costs.

Upcoming Webinar: Legal Tools for Value Pricing

Particularly in difficult economic times, value pricing can be a successful means to maximize profit by pricing products and services based on their value to end-users, rather than on the supplier’s cost. Applying it necessarily means that end-users are segmented, so that some will receive better prices than others. But many companies rely on the mistaken belief that the law requires “fair and equitable” treatment of customers to create self-imposed roadblocks to effective value pricing.

Gene Zelek, an experienced pricing attorney and former marketing manager, will show how the law is fully supportive of price segmentation. He will also demonstrate how the law permits the preservation of end-user value pricing by controlling corrosive price competition among distributors, retailers and other intermediaries (including those selling over the Internet) with resale price policies and minimum advertised price (MAP) programs. Finally, Gene will discuss price signaling as a lawful way to avoid sending the wrong messages to the marketplace that jeopardize value pricing strategies.
 

This webinar will cover the following topics:

• How the law allows account-specific pricing for effective segmentation
• Why resale price encouragement and setting is lawful in the U.S. and Canada
• The essential elements of legally compliant price signaling
  
  

REGISTER: http://www.spmgpricing.com/Webinars.aspx

Presented by: 

Eugene F. Zelek, Jr.
Partner and Chair, Antitrust & Trade Regulation Group
Freeborn & Peters LLP

Canada's Airlines Move to all-in ad Pricing

Updated: Wed Feb. 08 2012 20:02:37 The Canadian Press

MONTREAL — Canada's largest airlines have all launched all-inclusive pricing efforts that make it easier for passengers to determine the actual cost of flying. Air Canada began on Wednesday to advertise prices that show the final cost of a ticket by combining the extra charges that have been left out in the past. Porter Airlines, which flies regional planes mainly from its base at Toronto City Centre airport said it would begin to advertise the total cost of a flight on Friday.

They join WestJet Airlines (TSX:WJA) which began to advertise all-in fares in January.
The new pricing structure will factor in all of the fees, surcharges and taxes that customers wind up paying, which in some cases can virtually double the posted price of airline tickets.
The extra amounts include Nav Canada fees, airport improvement charges, fuel surcharges, insurance and air security charges.

Consumers also have to add taxes -- GST or Harmonized Sales Tax, and possibly sales tax or other taxes depending on the province or country. Canada's largest carrier (TSX:AC.B) launched its new all-in fare policy as it unveiled a seat sale marking its 75th anniversary. "Our all-in price advertising initiative is a response to our customers' increased desire for transparency and simplicity when shopping for air fares," said Air Canada marketing vice-president Craig Landry.

Air Canada's new all-in price will be displayed on its website, email specials, online and print advertising. Large newspaper ads on Wednesday, for example, showed a flight from Montreal to London costing $887, with the base fare starting at $244 and $643 in additional charges. Final prices may vary by routing and individual options such as baggage fees.
The changes come ahead of laws requiring more honest airfare ads expected later this year. Robert Kokonis, president of airline consulting firm AirTrav Inc., said the carriers didn't want to wait until the Christmas deadline. "I think they wanted to get it over with and also position themselves in front of the consumers' eyes as doing the right thing," he said in an interview. Calgary-based WestJet changed its print advertising in January, but bookings on its website and that of Air Canada don't at first glance show all-in prices.

"We are still working out some technical details to be able to display all-in pricing within our booking engine, which we expect will happen later this year," said spokesman Robert Palmer. Passengers initially see only the base fare when choosing flight times. But they can see the all-in price and breakdown of extra charges by clicking the price associated with individual flights. Unlike the other carriers, Porter will only show one price without highlighting fees and taxes separately, said president Robert Deluce. "We've been able to change what passengers expect from an airline by introducing standard premium amenities and affordable flights. Now, we're extending this experience to the booking process, making it easy to immediately understand how much a flight costs by showing one number."

Air Transat, which flies to the Caribbean, Mexico, Europe and the Mediterranean, has traditionally included all-in fares for its flights and package holiday and advocated such pricing for years. "It's interesting to see the change of heart of those who just very recently saw the light," Transat spokeswoman Debbie Cabana wrote in an email. The advertising changes are coming after the Conservative government announced in December new rules that will require Canadian airlines to include all fees and taxes in their advertised prices.
The Canadian Transportation Agency is consulting various stakeholders before drafting new regulations. They will need to figure out how the rules can be crafted so Canadian airlines are not put at a disadvantage

Pricing Club Conference (3rd Conference on Pricing Strategy & Management) Paris France, March 26th 2012.

"Price and Prejudice"Pricing is your product’s most important statement. Michael Hurwich - Managing Partner SPMG
Full Brochure:

http://www.pricing2win.com/Price%20and%20Prejudice%20Conference-%20Paris%2020120326.htm

To register:

http://www.pricing2win.com/Register.htm  & pay on line or email Sally at sbrodie@youneedpricing.com  to register and use other means of payment 

Paris, March 26th 2012
The „French Pricing Club‟, the „Pricing & Value Strategies Club‟ (on LinkedIn), the Club

„Pricing & Valeur Client‟ (on Viadeo) and Strategic Pricing Management Group are

organising a conference on the theme "Price and Prejudice" in Paris on March 26th 2012.

The Conference "Price & Prejudice" aims to focus on the organizational prejudices that prevent

effective pricing practices in many organizations, but also on the psychological dimensions of

Pricing & value strategies. It will provide real life experience from professionals from the

business world but also frameworks, tools and theories developed by researchers and

consultants.

This event aims to uncover practical experience as well as the latest breakthroughs in research

& impact modeling under three major headings, which are: Pricing Image Management , Price

organization development and Pricing Psychology . This conference will look at how to overcome

pricing prejudices to develop an effective pricing organization, how to utilize pricing psychology

to your advantage and on how to manage your pricing image for competitive advantage.

Includes presentations from

Conference presided by:

- Gérard Fauconnet (ex-Manager Global Pricing, Schneider Electric + Passionate Pricer)

- Loïc Le Corre (Managing Director, SPMG + President Pricing Clubs)

Pricing Club ConferenceProgram Overview 9h00-9h30: Welcome coffee and registration

9h30-9h45: Opening address: Gérard Fauconnet (ex Schneider Electric & President

Pricing Club)

9h45–10h20: Keynote address: Bernard Demeure – Vice President + Head Retail Practice – Oliver

Wyman - "Managing your pricing image .. and the impact of Pricing on your image"

10h20-10h45 : Coffee Break

10h45 – 12h15: Plenary session: "Developing a Pricing culture – influences and prejudices"

- Theory + Practice Stéphane Liozu (Président & CEO of ARDEX Ame ricas)

- Pricing Image Management - Loïc Le Corre - Managing Director SPMG + Pricing Club

- Pricing Practices in Europe - Pol Vanaerde – President European Pricing Platform

12h15-13h45: Lunch

14h00-15h30 : Parallel Session 1 "Price Perception & Positioning"

- Practitioner; Sophie Heller - Director Marketing ING Direct

- Practitioner + Consultant: Vernon Lennon President – The Pricing Cloud

14h00-15h30 : Parallel Session 2 "Optimizing New Product Launch"

- Practitioner: Michel van den Berge - Director Innovation Agilent

- Tools: Alex Smith - Director PROS Pricing Solutions

14h00-15h30 : Parallel Session 3 "Brand Pricing & Image"

- Practitioner: Elizabeth Laisne –Former Global Pricing Director Lenovo

- Consultant: Alain Meloche – Managing Director SPMG:

15h30-15h55 : Coffee Break

15h55-17h25 : Parallel Session 1 "Selling a dream & Pricing it"

- Theory/Practice : Gilles Laurent , Professeur HEC: "Pricing Luxury Goods"

- Practitioner: Michael Hurwich – Managing Director SPMG:

15h55-17h25 : Parallel Session 2 "Pricing the priceless: Health"

- Practitioner: Enrique Dodero - Pricing Manager at GE Healthcare

- Consultant : Loïc Le Corre – Managing Director SPMG

15h55-17h25 : Parallel Session 3 "Creating a Pricing Culture & organization"

- Practitioner - Govert Spit - Global Pricing Director at Castrol - BP

- Tools/Practice: Daniel Rueda – President Open Pricer

17h25-17h40: Final wrap-up and concluding remarks:

Join the clubs (free membership):
„Pricing et Valeur Client‟ : http://www.viadeo.com/groups/?containerId=00227v6uwz4vbyhj  

„Pricing & Value Strategies‟: http://www.linkedin.com/groups?mostPopular=&gid=127106  

Pricing Club Conference
Registration for the conference Registration includes material, coffee breaks and lunch.

To register: http://www.pricing2win.com/Register.htm & pay on line or email Sally at sbrodie@youneedpricing.com to register and use other means of payment

Regular rate: 349 Euros (399 € after 28th February 2012)

Pricing Club Members: 249 Euros (299 € after 28th February 2012) (LinkedIn & Viadeo)

VenueThe Conference will be hosted at "La Maison des Polytechniciens", 12 rue de Poitiers, 75007

Paris.
Organising committee:
Gérard Fauconnet – Former „
Marketing Vice-President / Chief Pricing Officer Schneider Electric’

Loïc Le Corre – Managing Director SPMG Europe

Michael Hurwich –President SPMG



:

How to Make Sure You Get the Price Your New Product Deserves

Article by Alain Meloche, Managing Partner at SPMG
Written for The Toronto Product Management Association

Your company’s President has approached you directly, saying that a new product is being introduced and that it represents the future of the company as he expects great growth potential from this initiative. As the Product Manager, he wants you to find the right price that’s going to capture the value but provide an incentive for the company to capture market quickly, as competitors are very aggressive.

New product pricing, given its sensitivity, highlights overall pricing issues and so is valuable as an example of the issues that need to be considered in the pricing of products.  But overall, it is also becoming a more significant issue for a growing number of firms as product lifecycles shorten and the level of competition increases. As for all products, but especially so for new products, the pricing of these products is especially difficult as there are a number of different and sometimes conflicting, factors at play. Internally, the finance department may want to ensure that development and implementation costs are at least covered and ROI targets met while the marketing group may want to maximize market acceptance and share. Externally, customers may want the benefits that a product provides but may hold back if they perceive risk associated, especially with a new product’s purchase.

How do you balance these various factors and set a price for new products? Our experience has led us to believe that resolving some basic questions provides a roadmap to setting those prices.

1)     What strategic objectives should those prices support?

2)     How does the new product fit within the context of the existing product portfolio?

3)     What benefits would customers receive from the product, actual and perceived?

4)     How could the price level and structure be set to capture all the value offered while taking into account customers’ costs and risks associated with new product adoption and the competitive environment?

1) Strategic Objectives in Setting Price

Whatever the chief strategic concern for a new service or product, price should help address it. This is true no matter what that concern is—whether to achieve rapid penetration of the market, retain customers, or protect margins despite uncertain costs. In each case, the strategy should be reflected in the price.

For example, new long distance providers, with high fixed costs but low variable costs and believing that customers were price sensitive, undercut prices of existing suppliers in order to rapidly gain market share. Everyone is familiar with regular price changes for gasoline based in part on gas companies passing on their feedstock cost uncertainties into the marketplace. “Whole life” insurance is priced highest for wage earners with young families and declines as needs and ability to pay declines- retirees and those on fixed incomes- thereby helping to retain customers for life.

The product lifecycle is a useful framework for thinking about how corporate objectives may change over time and these are shown in Figure 1. below.

Figure 1. Product Lifecycle and Objectives for the product

Companies using pricing strategies in support of those objectives, either explicitly or implicitly balance price with the value provided by their offering as shown in Figure 2.

Figure 2. Price/ Value and Pricing Strategies

There are two basic strategies available for new product release prices.

Premium

·         Demand is likely to be price inelastic

·         There are buyers that have a wide range of acceptable prices

·         Little is known about production and/or marketing prices

Penetration

·         Demand is price elastic

·         Entry barriers are low

·         No separate price-market segments that could accept a wide range of prices

·         Large sales volumes lead to economies of scale

In turn, there are three key elements that determine whether premium or penetration pricing should be used:

·         Nature of the product

o    Revolutionary

o    Evolutionary

o    Me-too

·         The potential competitive response

·         The potential competitive response

·         The existing product portfolio and the resulting company position

The value of new products typically increases directly proportionally to whether the product is me-too, evolutionary, or revolutionary. This in turn, provides guidance relative to the extent that penetration or premium pricing strategy should be pursued. The newer or more revolutionary is the product, with the fewer the comparables, the greater is the opportunity to seek premium pricing. On the other hand, for products that may simply be new to your own company, but not to the market, the opportunity for premium pricing is limited. Penetration pricing is more realistic, but, given existing competitors and their competitive responses, realistically, pricing should occur closer to the price/value equivalency line. Opportunities for penetration pricing occur again at the lower end, with low price/value where the competitive threat presented may not warrant strong competitor response.

2) New product fit within the context of the existing product portfolio

While a new product may represent an entirely new niche or position for your company, its position, to some extent will still be judged in terms of your existing portfolio. Think of the Volkswagen Phaeton. While it represented a completely different product from the existing Golf, Jetta, and Passat lines, the market still judged the new product in light of that existing product line. It was difficult for customers to make the leap from the $15,000- $30,000 price band into products that started at twice that level.

The issue of cannibalization also affects release price. Let’s suppose that Volkswagen had released the Phaeton in the $35,000-$40,000 price range. While it would have been more consistent with Volkswagen’s existing position, the incremental $5,000-$10,000 price over the top end of the Passat may well have led to significant cannibalization of Passat sales. After all, for that relatively minor amount of money, buyers at that range, with somewhat less price sensitivity may have chosen a clearly superior product. The question then became: would a buyer of a brand such as Mercedes or BMW have been willing to switch given the value ascribed to the Mercedes and BMW brands?

The fatal error in VW’s perception was its belief that only performance and other “hard” quality criteria were used by customers to judge the value of the product. The result was a market that perceived an overpriced product while VW was marketing based on the assumption that market was prepared to accept a product in a substantially different position from the rest of its portfolio due to a price/value offering better than its competitors. The approach may have been valid had the market judged value purely on the basis of engineering factors.

Conversely, BMW could choose to launch a cheaper vehicle at a lower price point. While BMW internally, may believe that by pricing to penetrate into a new market segment as shown  in Figure 5, the market may perceive that BMW market strategy is one of pricing generally above the value line so that the quality of the new product may be suspect. The connotation in the market’s mind may then bring the overall perception of BMW market position down the value/price chart. So, it’s important to recognize that price makes a statement about your product. While VW had wanted to make a statement about its”new” product quality, the market viewed that statement as significantly inconsistent with the current position.

3) Actual and perceived benefits from a product

To understand how much of a premium can be charged at the upper limit of the price line requires some understanding of the benefits of the product. Again, this depends on several factors, the most important of which are:

1)     The customer’s industry ( i.e. consumer, business,..)

2)     The product’s life stage: me-too, evolutionary, revolutionary

The degree to which these can be measured with some degree of precision and the extent to which actual to perceived benefits are balanced are represented in Figure 3. As can be seen from that chart, the most readily measured benefits are related to those products that are well established in the marketplace and sold on a B2B basis. Revolutionary products sold to consumers are those the most likely to be sold on the basis of perceived benefits. 

Figure 3: Impact of the Nature of the product and the Customer’s market on Benefits Focus

In the case of a B2B sale, incremental benefits, however, can more easily be quantified through a value chain analysis where the seller can make estimates as to benefits such as supplies, H.R. resources that may be saved through purchase of the new product.

For B2C estimates of the value added, perceptions of the benefits are more likely to lead decision making.

4) Setting Prices

There are two key elements in pricing be it for new or existing products: level and structure.

Level

Release price sends an important message to the market as seen in the automotive case discussed above. Two approaches were highlighted in the automotive case and discussed subsequently;

• Premium
• Penetration

For premium pricing, the question is : what’s the upper limit? Three factors, in turn, are involved in that answer:

1)     Incremental benefits (actual and perceived)

2)     Existing perceptions of the company in the marketpalce

3)    Actual and perceived costs and risks of the purchase by the customer

For penetration pricing, the question is: how low should you go?

1)     At the lower limit, consider cost-plus

2)     Competitive response is a critical factor since too low a price will likely elicit strong competitor response.

3)    Market uptake (volume) needs to be balanced with the potential margins that could be obtained by pricing closer to the benfits actually provided by the product

Structure

Again, it’s critical that the structure be designed so that corporate and customer objectives be supported by the price structure. For example, 25 years ago, few vehicles were leased while today, approximately 20% of vehicles are leased. Through this pricing structure, price was effectively deconstructed, allowing for easier purchases with less money upfront. Also, through the nature of that structure, those leasing cars continue to outlay money to the manufacturers on an ongoing bais as leases expire and consumers typically lease another vehicle.

Key Learnings

The importance of new product pricing lies in its highlighting of issues that are common to pricing generally. In this case, three key points stand out:

1)               Understand what customers will be using to measure value (unlike the engineers at VW)

2)               Understand where your product lies in the spectrum of new products:

a.     If it’s entirely new, with no comparables then more pricing flexibility is possible

b.    For a product with better performance characteristics than existing comparables, the magnitude of incremental pricing can be more easily quantified as the measures/ metrics for the benefits are clearer.

c.     If a product is only new to your company, then pricing needs to be based on competitive factors.

3)               Quantify, quantify, quantify- to the maximum extent possible: BUT, always take into account the broader context and common sense!