Sunday, February 14, 2010
Product Line Pricing
Product line pricing is when management must decide on the price steps to set between the various products in a line (pg. 272). In other words, it is when a company must decide the price differences between the upgrades of a product or service.
I found this example while reading articles on Yahoo.com. The article is What Your Gadget Really Costs by Arik Hesseldahl. The part of the article that I focused on was the Apple example.
This is a great example of product line pricing because it shows how Apple is going to have 6 different versions of the iPad and all will have different prices. The article states the range of the prices will be around $499 to $829. The article really emphasizes the differences in the costs to make the product between the $499 iPad and the $829 iPad. This is one component of product line pricing. It also mentions the customer perceptions of the iPad. Three of the versions will have 3G, which some customers may believe this will add value to the iPad. While, the other three do not have 3G. This is a great example of product line pricing because it includes the costs to make the versions, the different features included in each version, and how Apple is making several different versions of a similar product.