Here are some things I learned as a Product Manager:
1. No matter how good your product is, if you price it too low, people will think it is junk.
2. It’s alot easier to start with a high price and then lower it than it is to raise a low price to a higher one
3. Good service sells mediocre products
4. Subscription services bring in revenue for eternity but the product only sells once
5. Service reputation can make or break a product
6. You can often get away with making a mediocre product but you can almost never succeed providing a mediocre service
7. You can sell the product for a much lower price if you REQUIRE a service contract when the product is purchased.
8. You can advertise a much lower price for a product with required service and just add the service subscription as an “afterthought” to the sale and most people will pay attention only to the product price
9. If the product is too light people will think it’s not worth the price – IBM once added lead blocks to the product to make it heavier because customers associate weight with value
10. A good quality case can cover up for cheap components and everyone will be fooled.
11. The logo and reputation of the company command a far higher price than the product itself
12. Customers will almost always purchase a mediocre product with good service over a much better product with insufficient service
13. Never underestimate the value of a good salesman
14. Cheap products with lots of low cost accessories make for great profit margins
15. Never underestimate the vanity of the customer — the cache, appearance and presentation of the product will sell it if it makes the customer feel important
16. The price is never the price. Always build in room for discounts, including the “extra special” discount for that difficult customer
17. You can control only two of the three things needed to bring a product to market — cost, features or time to market. Choose wisely.
18. Never understimate the value of word-of-mouth advertising.
19. Short term solutions have long term impacts
20. Build a product with migration to the next version in mind. Migration services lock the customer into your product.
21. Don’t be fooled by volume — there’s an adage that says, “I lose a little on every unit I sell, but I make it up in volume.” Revenue is NOT profit.
22. The biggest cost of selling any product is the labor required to sell it.
23. Cut your losses on a losing product and move on – money in hand today is better than hoping for a big sale tomorrow. Products get old and todays cutting edge product is tomorrow’s blunt instrument.
24. “Just in time” manufacturing is only effective if you can deliver “just in time.”
25. The sale doesn’t end when you cash the check – you want the customer to come back tomorrow too.
26. The product is NEVER the product — the solution is the product. Customers want solutions, not products.
27. Don’t be lead around by the nose by what the competition is doing. You can’t ignore them but don’t follow them either
28. If the competition has a much better product, change the playing field, not the price
29. Gross margin is determined by the equation Actual Sales Price – Cost/Actual Sales Price. Determine your minimum margin required to cover all costs before determining price. This may require forecasting your sales volume and give you the target you need to be successful.
30. The price is always lower at the end of the month than at the beginning and always much lower at the end of the quarter than at the beginning. The best deals happen at the end of the fiscal year.