What is likely to be our optimal price for product AB: using Option Solving?

Not so long ago, it was interesting to be involved with some executives as they were trying to guesstimate the launch price for a new product: always a tricky affair. Fortunately, they had all been associated with their market and related products for some considerable time, so they had built up a great deal of intuitive instincts about likely market and customer behavior. It’s probably unwise to work with your instincts without a good deal of exposure to related market forces, but, with such instincts, Option Solving can play a big part in your ultimate decision.

After a briefing on the option solving technique, they were willing to give it a shot to test its merits on their dilemma. So, sooner rather than later, they got to work on developing an appropriate question to help flush out the issues. It turned out to be as follows: “What is our best pricing option for a new product we are about to market; considering 1) cost of product development, 2) potential perceived market value, 3) using an online approach, and 4) convenience of access?” They did come up with other considerations, but decided to focus on these key four choices so that they wouldn’t overly complicate their dilemma question.

Armed with this question, they set-about drafting two yin and yang “bookends” to help focus their pricing options. The bookends they chose were as follows: “No charge” and “5x Top $ option.” These most unlikely option framers are designed to focus our brilliant intuitive minds, that can easily be distracted, on figuring out our most likely and realistic options – see our Latest Worked Example.

With these in mind, they were then challenged to dig-up at least five realistic options for their ultimate consideration.  We’ve found in practice with option solving that when you produce a minimum five options, it stretches the broadest and most creative ideas.  Look at our Latest Example and you will see that we came-up with a sixth alternative – one is: “Option D: X Price.” Clearly this group used actual numbers, but those would create confusion for our readers without knowing the precise context.

With this “pictogram” now in place, showing the range of pricing options, they engaged in some emotional distancing to allow time for their intuitive minds to scan all their other life experiences for similar circumstances. In fact they broke off for a couple of hours to address some other matters and then returned to their turned-over pictogram to reconsider it.

Emotional distancing is the time that their intuitive minds would sub-consciously ponder their six options. Coming back to their pictogram would focus their

intuitions on making an optimum choice. This choice would quickly emerge once they revisited their pictogram.

They did make their optimum intuitive choice and were encouraged to immed-iately set their decision in motion, while everything was still fresh and top-of-their-minds, and figure out a more specific game-plan to implement it. Which option would you have chosen, if you were in his shoes?

If you have an example of your own, please share it with this blogger, through the COMMENTS area.  Thanks Option Solving. (NOTE: Next posting will be in two weeks time: “What is the optimum play for launching a new product?” Let’s have your COMMENTS or go to peter@ileadershipsolutions.com to connect with the blogger. Also consider buying the book: “Smart Decisions: Goodbye Problems, Hello Options” through amazon.com)

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