No Time? No Problem

How Low Should You Go?

Jerilyn Winstead wanted to price the BlanketStrap very low so every nursing mother could afford one. Probably the biggest misconception I've run into in my 20 years of marketing new products is that low-priced products are easier to sell. In fact, just the opposite is true. The problem with inexpensive products is that the sales costs for distributors, retailers and manufacturers' reps are too high for them to make any money.

Winstead tried to sell the BlanketStrap to several baby products catalogs. Only one was interested in her low-priced product. Why? First, a catalog's shipping and handling charges are typically about $5--almost the same amount as Winstead's suggested retail price of $4.99. Consumers don't like it when a product's shipping and handling cost more than the product itself.

Second, catalogs typically make more money on expensive products. The only time catalogs might accept a low-priced product is if it appeals to every buyer. The BlanketStrap appeals only to mothers who are or will soon be nursing--a small segment of most catalogs' customer base.

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This article was originally published in the July 1999 print edition of Entrepreneur with the headline: No Time? No Problem.

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