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How much should it cost?

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David Blaise is the author of "Sledgehammer Marketing" (www.sledgehammermarketing.com) and a principal with marketing consultancy Blaise Drake & Co. BtoB recently asked him about key discounting metrics and techniques.

BtoB: How can marketers set prices that aren't too high or too low?

Blaise: The quick answer is split testing. You run two ads or send out two direct mail pieces that are identical to each other, except for the stated price. Generally, one offer will outpull the other, telling you which price the market likes better. Surprisingly, it's not always the lowest price. Calculate the profitability of each price point. and that will tell you what to charge. Just keep in mind the lifetime value of a customer. In some cases, it makes sense to sell at a lower margin to get new customers in the door, particularly if you can up-sell and cross-sell them later on.

BtoB: What's are some dangerous, unintended consequences of monkeying with prices?

Blaise: The worst is annoying and alienating good customers who pay full price. If you only discount to get new customers, you're rewarding the wrong behavior. Instead, you want to reward your best customers. Two other dangers are conditioning people to wait for the sale and attracting customers who are particularly price-sensitive.

BtoB: Are there any circumstances where you'd never, ever discount a product or service?

Blaise: Well, I'd never say never. But with random, unjustified discounting, people don't know what to believe. If you veer too far from your published pricing for no apparent reason, your list price can become meaningless and you may appear less trustworthy.

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