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SCIENCE OR SUPERSTITION?...
The Black Art of Product Pricing.

Henry Ford is rightly credited as a genius. After all, he invented the production line, right? Well, yes, he did invent the production line but that was a result. The cause is what elevated Ford to genius status and it all started with pricing.
    When Ford was scheming to build the Model T, he assembled a work force and agreed to pay each worker five dollars a day—a handsome wage in those days. Now the thing was, Ford hoped to sell his automobile to workers a lot like the folks he was employing, therefore he knew he had to price the product within reach of their pocketbooks.
    For determined that he could sell his Model T for no more than $850. And—and here's the kicker—within that $850 selling price, he had to make a profit.
    Ford set his heavy thinkers to the task of figuring out how to do that. And the most cost effective method they could devise was to build the cars not one by one but in waves—what we've come to call the assembly line. The production line was revolutionary and Ford sold countless cars.
    Price, as Ford proved, must equal value.
    We know a semiconductor engineer who learned this lesson also.
    "We'd invented this photo-semi," he remembers, "and we priced it—based on nothing very scientific—at something like twelve dollars a piece."
    Honeywell Camera was interested in this semiconductor for a slave flash unit they were developing, so the engineer took himself out to Honeywell Camera to make a pitch. He pitched and the Honeywell guy was impressed.
    That's when the conversation got around to the question "What does it cost?"
    "Twelve dollars per unit," said our hero.
    "We can pay no more that a dollar-sixty-eight in quantities of 10,000," replied the Honeywell man.
    "I'll have to see if that's acceptable," said the engineer, "but tell me, please, how did you arrive at that price?"
    The Honeywell man was kind and he had a teacher's instincts. "The costs of the parts of our product represents one-fifth of the retail selling price, therefore our parts list for the slave flash unit can't exceed X," (And here the Honeywell man supplied a number.) "Your semiconductor is the last part we have to buy and we only have $1.68 left over. So that's what we can afford to spend—$1.68."
    We can draw a couple of lessons from these two stories: 1) that setting the price of a product is a corollary of the old 80/20 rule: there is a five to one relationship between and the ultimate selling price and 2) you have to look at what the market will bear; this includes answering the questions: what is my competition doing? and am I pricing my product so low that the market will undervalue it?
    Now after you consider the profit you need to make and the five-to-one ratio rule; and after you've looked at the going market price, and weighed in the value, you might as well know that there is an element of witchcraft in pricing a product or service. So take a deep breath, close your eyes and pick a number. If you've picked the wrong one, your market will let you know soon enough.

SHAKING THE TREES.
How Long Has It Been Since You've Pitched a Promotional Effort To Your Current Clients Or Customers?

Marketing professor Philip Kotler, claims that in mature markets "it costs five times as much to attract a new customer as to retain the goodwill of an existing one."
    So what have you done for your customers lately?
    Remind them of the services you offer. Even with your good customers, don't assume that you are seeing all of their business. Aim for more.
    Review your list of products and or services. Perhaps some of your customers are unaware of your scope or breadth. Tell them.
    Tell your customers that you value their business. Then ask for more. Offer incentives by way of thanking customers. Dollars off on a future purchase or a bonus program are other ways to entice a customer into giving you more business.
    Oh...one thing more...isn't it easier to market to the folks you know than to strangers?

IT PAYS TO INCREASE YOUR ADVERTISING WORD POWER.

A SAMPLING OF DIRECT MAIL FACTS.
Some Are Common Knowledge; Some May Be New And Surprising.

Mail with a First Class® stamp has a higher chance of being opened and read. The fancier the stamp, the more it gets noticed.

Types of envelopes carry different expectations. A window envelope leads you to expect a bill. A square envelope leads you suggests a greeting card or an invitation.

The United States Postal Service has Post Office Business Centers staffed with experts who can answer direct questions. Describe your project as thoroughly as you can; prepare a dummy if possible and pay attention to the weight of your paper stock. Try to lower mailing costs by modifying design or paper. For more information from the Business Services section of the USPS just click here to visit their website.

The three most powerful words in advertising: new, sex, free