Enqio

The Price Is Right

written by Steven Dupon, Matej Karpisek, Daniel Rueda   March 2010

Price is a key buying factor for telecom services. It communicates the value of your offer and creates a host of expectations about it. Indeed, pricing can make or break the success of a new product or service.

An overpriced offer will almost always lead to slow penetration and low market share. For services that have a critical mass threshold to function properly and reach profitability, over pricing can be detrimental to say the least. Many telecommunications services need this critical mass; there’s little use in having a phone if there is no one to call.

On the other hand, under pricing an offer can make an otherwise viable value proposition unprofitable. This lack of profit can eventually lead a company to discontinue the service; destroying customer value and loyalty in the process. When ‘pay as you go’ tariffs were first launched operators were unable to invoice text messages. Had they not been able to set a correct price for the service they would have been forced to discontinue it. Knowing what a success texting has become, we can see how they would have missed out on a wealth of customer value.

How do you set a price? What are the key factors to consider? Let’s look at what ‘pricing methodology’ has to offer...

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