Price setting and price architecture

Setting list prices for a new product range

A launch price is the one price you can set without negotiating down from a previous one. Set on cost-plus, it is rarely recovered.

Read on ↓

1
What is changing
Product cycles are shorter and ranges larger, so businesses launch more products each year with less time to price them.
Customers compare new products with online alternatives from the first day.
2
Common signs
- New products launch at cost plus the usual margin.
- Nobody has asked target customers what the product is worth to them.
- There is no agreed floor, so discounts start in the first week.
- Launch prices are not reviewed once buying habits form.
3
Where it leads if left alone
A product priced below its value earns less for its whole life and pulls down the range above it. A product priced above its value stalls and is discounted to move.
4
The decision that is hard to reverse
The first price customers see becomes their reference. Raising it later is negotiated like a price rise.
5
What recovery costs
Repositioning a mispriced product means a relaunch, new collateral and customer conversations, usually at a lower margin than a correct launch price would have earned.
6
What good looks like
- Value discovery with target customers before the price is set.
- Floor, target and ceiling prices by segment and channel.
- A sales team trained on the value case before launch.
- Realised prices reviewed at 90 days.
7
What it is worth
Launch pricing compounds. Each year the product sells, the margin set at launch is earned again.
8
How it is treated
1. Establish what it is worth. Value discovery with target customers, and the price of the next best alternative. Negotiation Training & Value-Based Selling →
2. Set the corridor. Floor, target and ceiling prices by segment and channel, agreed before launch. Strategic EBIT Opportunity & Risk Diagnostic →
3. Review at 90 days. Compare realised prices with the corridor and adjust before habits form. Value-Based Culture & Transformation →
9
How Pricing Insight works
Experience
Ron Wood has worked in pricing for 30 years: first as a pricing and commercial manager in FMCG, building materials and capital equipment, and since 2007 as adviser to more than 160 businesses.
Method
Each engagement follows the same sequence: diagnose, optimise, embed. Recommendations rest on the client's own transaction data, and every figure can be traced to it.
Measurement
Results are measured against a margin baseline agreed with the client's finance team, and reported as realised, modelled or identified.
Continuity
Ron Wood leads each engagement from the first meeting to handover.
10
What will customers compare your new range with, and at what price?
A first conversation establishes how this applies in your business and whether a diagnostic is warranted.
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