Week 4 - MBA 6101 - Ascend your Start-Up

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Hello,

 Price is derived from supply and demand, but a firm has some wiggle room on what they charge based on what they want to communicate through the price. For example, a firm that charges the most amongst its competitors wants to convey the message of a premium product, versus the lowest priced product conveying a bargain message. The start-up needs to determine where they fit into the market and price accordingly. Nevertheless, all pricing is not equal. A start-up can maximize their revenue through their price structure. This is the focus in Chapter 4 of Ascend your Start-Up.

 

Hopefully the start-up will have customers in many regions. With a diverse customer base comes the question of how to charge them for product or services provided? The book outlines two options. The first is extension pricing in which the same price is applied to all customers regardless of location, or second, competitive pricing which negotiates different prices for different customers (Yu, 2021). The right choice will depend on what the start-up is offering.

 

Once a customer is gained, it is vital for the start-up to keep that customer. Cost is lower with an existing customer than those required to gain a new customer. Thus, profits can be maximized through upsells, cross sells, and subscriptions (Yu, 2021). A winning product has many elements including satisfying the target market, and increase revenue without the sheer force of resource expenditures (Yu, 2021). If the right product reaches the right market, the product will be easy to sell. If the product reaches the wrong market, the start-up must determine if there is a different approach to penetrate this market, or if a new market must be found. Equally, the revenue generated from a sale cannot be consumed by the cost of sale.

 

The right product, the right market, and the right price structure is needed for a start-up to become established. The start-up must experiment until this combination can be achieved, and must be willing to change its plans in order to meet market demand.

 

Citations:

Yu, H. (2021). Ascend Your Start Up, Conquer the 5 Disconnects to Accelerate Growth. Made                    for Success Publishing


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