Deciding The Right Price Point

Pricing will be a very important decision for you to take in your business development efforts. In fact it can eventually decide the fate of your business. However innovative your offerings can be, you cannot afford to neglect the price sensitivity of the target market. Most of the sales managers advocate showcasing value of the offerings - Flexible, ease of use, cost benefit analysis, 24*7 support etc - which may not be just enough to breach the barriers to enter a new market. There is surely some price tweaking required which is famously known as Pricing Strategy.

In eastern markets services are usually available at cheaper rates. Hence customers prefer building the solutions in house or outsourcing instead of buying new products. In such a scenario a vendor selling products cannot use the same global price list. His competition here is not just other product based vendors but also the services based vendors. Hence a very attractive introductory offer which is a byproduct of a good research is vital.

Very important point to consider is that the price sensitive markets can be too large to ignore. For example in India, Brazil or China a good discount can actually increase the volumes many fold. Which means your deal size can still be attractive and comparable to western markets.

If your offerings are of premium quality and you think steep discounts may hurt your positioning, try knocking off few features. I often use this example of selling in 'satchets' instead of 'bottles'. It will provide a great land and expand opportunity.

Also I believe it is better to have your price list in the local currency instead of having it in US Dollars or British Pounds. It might be an overhead cost for you to have multiple price lists, but it is worth considering. Some times it can  just be a mental block for the customer. I remember in few of my sales meetings 8000 USD was a deal breaker, whereas 400000 INR was still open for discussion.

Software product companies like SAP, Microsoft have already seen huge success in APAC region. This is a good indicator that customers here are very much open to innovative products provided the pricing is right.