There's a need for you to understand the "facts of life," when it comes to pricing.
Many companies devote a tremendous amout of effort to "stacking the deck," so they don't have to deal with bothersome competition. Some of these strategies include:
- Getting an engineer, or architect, to write the specs in such a manner that only one particular product can be used;
- Limiting access to your product to "certified" installers;
- Distributing your product into "protected territories" so that only one of your reps will be able to do the job; and,
- Designing your equipment so that is can only use your parts.
When an inquiry comes in, there is no need to worry about competition.....so you can charge the full list price. Naturally, these schemes all collapse if technology changes things, if other brands are allowed into the job, or if things become 'standardised.'
When it is discovered that someone found a way to introduce a competitor into the mix- well, you can imagine the howl that goes up. Polished "Wormtongues" appear, crying 'listing violation' or 'not to specification' or magnifying some tiny difference into titanic proportions.
Another factor that enters the mix is the ability, and willingness, of the customer to pay top-dollar.
Governmental customers are favored, as not only do they (through taxation) have a bottomless bank account- their political processes make choosing anything but "the best" subject to endless second-guessing.
John Ruskin said something to the effect that 'there is nothing that cannot be made woorse, or cheaper....and the customer who loks at price alone is that man's lawful prey.'
In other words, price is only part of the "value" equation. Two other, major, parts of business are quality and service. Do not overlook these in your business plan!
