IT Best Of Breed

The 5 pricing myths tech firms must overcome now

Hardware and software suppliers usually have far more pricing flexibility than they realize.

By Stephen Mewborn and Justin Murphy

First published on diciembre 31, 2014
min read


This article originally appeared on IT Best of Breed. When executives in enterprise technology industries think about trying to get a price premium for their products, they often throw in the towel before the fight has begun. Five myths, in particular, have become ingrained and, as a result, many tech firms leave money on the table. Yet hardware and software suppliers usually have far more pricing flexibility than they realize. Some companies have, in fact, broken through the five self-limiting beliefs described below through deliberate efforts to redesign pricing approaches and sales practices. 1. Our products are commoditized, so we must accept prevailing prices in the market. Many companies pigeonhole themselves as price takers, believing higher prices or a tougher stance on pricing will cause customers to defect. Price takers overlook a range of other factors that customers care about and that justify a price premium. A recent Bain & Company survey of 111 purchasing executives of computer hardware, software and services, showed that price is rarely the most important decision factor. Tech customers express stronger preferences for easily integrated, customizable products. As shown in the chart below, survey respondents are willing to pay 8.4% more for better integration with other technical systems, 7.2% more for the ability to customize the product and 7.0% more for ease of use. Read more at IT Best of Breed

This article originally appeared on IT Best of Breed.

When executives in enterprise technology industries think about trying to get a price premium for their products, they often throw in the towel before the fight has begun. Five myths, in particular, have become ingrained and, as a result, many tech firms leave money on the table.

Yet hardware and software suppliers usually have far more pricing flexibility than they realize. Some companies have, in fact, broken through the five self-limiting beliefs described below through deliberate efforts to redesign pricing approaches and sales practices.

1. Our products are commoditized, so we must accept prevailing prices in the market.

Many companies pigeonhole themselves as price takers, believing higher prices or a tougher stance on pricing will cause customers to defect. Price takers overlook a range of other factors that customers care about and that justify a price premium.

A recent Bain & Company survey of 111 purchasing executives of computer hardware, software and services, showed that price is rarely the most important decision factor. Tech customers express stronger preferences for easily integrated, customizable products. As shown in the chart below, survey respondents are willing to pay 8.4% more for better integration with other technical systems, 7.2% more for the ability to customize the product and 7.0% more for ease of use.

Read more at IT Best of Breed