Optimized Pricing Strategy

Optimized Pricing Strategy that Increases Market Share and Margin

Does your pricing strategy “leave money on the table”?

Situation:

A technology company had developed a compelling application for food safety that monitored temperatures throughout the “food cold chain.”

The challenge for the company was the newness of its product as well the newness of the category in the market. Because of the introductory stage and disruptive nature of this product, prospective customers found it difficult to establish a price-value relationship when considering the offering.

If a competitive pricing strategy was pursued, the risk is to mis-price or not account for many of the attributes of the new application.

The NovaLex team member had to find a means to develop a true demand-based approach that was derived from an honest assessment of the product potential.

Action:

The NovaLex team recommended that the client reject any competitive pricing strategy and instead, use a pure demand-based approach.

Using this unique, demand-based method, NovaLex was able to select between two options: optimized pricing for maximizing margin or maximizing penetration (market share).

As this was a new product, it was decided that in the initial stage of introduction, maximizing penetration would produce the best results.

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