Article at a glance:
Companies habitually charge less than they could for new products, especially with revolutionary offers. Underestimating a product's value can be a costly mistake, since the introductory price often fixes its worth in the buyer's mind.
The take-away
Good pricing decisions take an expansive, rather than an incremental, approach to new products. Companies should construct a range of possible prices based on the new offer's value to customers and the competitive landscape.
This article forms some of the content in
The Price Advantage, by Michael V. Marn, Eric V. Roegner, and Craig C. Zawada (John Wiley & Sons, January 2004).