Wednesday, March 3, 2010

Value-based Pricing

UGG boots from Australia has been very popular during the winter. Almost every college girl owns a pair. Nordstrom sales price $179.95 a pair. We can get it for cheaper such as $150 or even below $150 if you make a bid. Mostly the UGG boots to the USA are produced in China. And the material cost plus shipping cost to America is $45 to $55 per boots. If store bought in wholesale, it will be even cheaper. However, there is a huge gap between the real production cost of the product and its retail price. After the products are displayed at Nordstrom. The price does not just include the material cost. The commercial and the store give a higher value to the product, for example, UGG boots are from Australia, imported from Australia added more value to a pair of ugg boots. Furthermore, they claimed UGG boots are made of real sheepskin, which can definitely keep your feet warm in winter. Lastly, since everybody has been buying them, everybody wants to join the club and own a pair. When the sales amount go up, it showed that people start to agree the value of UGG, then the company will not likely to lower the price when facing a high demand. So high demand of the boots kept the value excess its costs. Not for too long, UGG boots have become a trendy footwear in the winter.

Ying-Ju Lai. Section G.

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