Pricing models
by Paul McGowan
As of late, there's been some discussion on the forums about the model we use for product pricing.
From what I can ascertain, the general view seems to be companies have a complex pricing model based on a combination of what they believe the market will bear and what it takes to cover all their R and D and tooling costs. At some level, this pricing model surely exists, else how do we wind up with half-million-dollar speakers or $50K cables?
When it comes to the mainstream companies I think the truth is somewhat simpler.
My guess is we're all pretty much the same: a simple multiple of what each product costs to manufacture. The multiples vary depending on the expected number of units to be sold and what the sales volume of the company is.
At the end of the proverbial day, companies have to charge enough to cover expenses.
For most companies like PS Audio, pricing is based entirely on what it costs us to build your products.
Simple works best.
Paul McGowan
Founder & CEO
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