How to price your products: The story of Swatch
The Swiss are well known for their watches but they became so focused on their own techniques and ideas that the Asian watchmakers who produced digital watches quickly and easily bypassed them with cheap convenience.
The Swiss were in trouble so one of their strategies in the 80’s was to create a low priced alternative that would not only be a fashion accessory, but it would win back buyers.
The designers set the target price of the watch and demanded that their engineers figure out how to produce a watch at that price. In a way, it was like reverse engineering from the price tag and engineers were able to create a watch that was 80% cheaper to produce because it had fewer moving parts.
What does it mean for you:
Sometimes you will have to compete on price and won’t be able to get away with it. But Swatch shows us that you don’t have to compete dollar-for-dollar. While the Asian market created $10 to $50 watches that were functional, the Swiss created watches that were relatively close in price (about $50) but offered other things as well – like being a fashion accessory.
Application: Look at your prices. If you find yourself locked in a battle for the lowest possible price with a competitor, stop! Revisit your pricing strategy and positioning. Consider how you can compete at a price that is close (but slightly higher) while differentiating your product or service enough to make it stand out.
Jessica Routier, IAC-EZ
Posted in: Just Blogging
Jessica Routier
Jessica wants to talk to you! She is who coordinates the contests, travels to all the conferences, and interfaces on a fun level with customers on a daily basis in order to bring our users together as a community.
Jessica has a B.Admin and an MBA. Her background in business, along with a diverse skill-set (including a diploma in Medical Transportation, retail experience, and experience as a paralegal) make her a valued, highly flexible team member.
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