# Marketing Folks: How To Price "widgets"? **URL:** \ **Category:** Factual Questions\ **Created:** [July 23, 2002, 2:43am UTC](https://boards.straightdope.com/t/marketing-folks-how-to-price-widgets/120323 "2002-07-23T02:43:51Z")\ **Posts on this page:** 10\ **Page:** 1
**Author:** ![Jinx](https://avatars.discourse-cdn.com/v4/letter/j/c6cbf5/32.png) [@Jinx](https://boards.straightdope.com/u/Jinx)\ **Post date:** [July 23, 2002, 2:43am UTC](https://boards.straightdope.com/t/marketing-folks-how-to-price-widgets/120323/1 "2002-07-23T02:43:51Z")
Marketing folks…how do you go about pricing your widgets so they are competitively priced? I’m not a business major, but I need a crash course! Obviously, I’d check out the competition and learn why our widgets are better, but how do you price 'em to sell…including company margin? (I assume this is profit, right?) Where does one even begin? If it matters, these are mechanical systems…not cool toys with some gimmick to help them sell themselves. Thanks, Jinx! ---
**Author:** ![kniz](https://avatars.discourse-cdn.com/v4/letter/k/c37758/32.png) [@kniz](https://boards.straightdope.com/u/kniz)\ **Post date:** [July 23, 2002, 4:02am UTC](https://boards.straightdope.com/t/marketing-folks-how-to-price-widgets/120323/2 "2002-07-23T04:02:42Z")
You would price them according to supply and demand. Since I am unaware of any demand for widgets, your best bet would probably be to advertise them on TV for $19.95 and offer a smaller personal size widget to the first 50 people that call in. 😛 ---
**Author:** ![Ringo](https://avatars.discourse-cdn.com/v4/letter/r/779978/32.png) [@Ringo](https://boards.straightdope.com/u/Ringo)\ **Post date:** [July 23, 2002, 4:32am UTC](https://boards.straightdope.com/t/marketing-folks-how-to-price-widgets/120323/3 "2002-07-23T04:32:19Z")
Do they really widge like a widget should? You know what it costs to make them. The marginal cost will fall as more production is justified, but presumably the venture made an estimation of the cost that must be recovered from an initial market entry production batch. So you kinda have an idea. I don’t know if these widgets will widge me at home on the couch or if they’ll widge the heck out of my competitor’s wide-tracked widgets on the jobsite. Either way, you have some idea of the cost you need to recover. If they cost you $30/unit to make and distribute, you have to market them for better than that. That’s simple. What ROI does your investment plan call for? 3:1? If so, you ultimately need to recover $90/unit produced. But an entrepreneurial venture must have budgeted _X_ amount for market failure - i.e., what we’ll spend to see if it flies. So you have some idea of how cheaply you can sell the initial batch in your attempt to achieve some market penetration, before you need to turn a profit on sales. Are there competing widgets? What do they sell for? Are yours bigger and better? Or, perhaps, much cheaper, but perform most of the same important functions, with, perhaps, less in the way of power-windows to break down later? Just some thoughts. Good luck! ---
**Author:** ![Ringo](https://avatars.discourse-cdn.com/v4/letter/r/779978/32.png) [@Ringo](https://boards.straightdope.com/u/Ringo)\ **Post date:** [July 23, 2002, 4:49am UTC](https://boards.straightdope.com/t/marketing-folks-how-to-price-widgets/120323/4 "2002-07-23T04:49:52Z")
On rereading the OP, it appears these are commercial widgets marketed to (perhaps?) industry. The pricing of such is, I believe, easier than retail pricing, because there are fewer pulses to take. Before I go further, how big is your market? ---
**Author:** ![RealityChuck](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/realitychuck/32/195_2.png) [@RealityChuck](https://boards.straightdope.com/u/RealityChuck)\ **Post date:** [July 23, 2002, 12:40pm UTC](https://boards.straightdope.com/t/marketing-folks-how-to-price-widgets/120323/5 "2002-07-23T12:40:53Z")
I don’t know, but I do know if you make World Wide Widgets, you can succeed in business without really trying. And maybe star in a Broadway show. ---
**Author:** ![Jinx](https://avatars.discourse-cdn.com/v4/letter/j/c6cbf5/32.png) [@Jinx](https://boards.straightdope.com/u/Jinx)\ **Post date:** [July 23, 2002, 11:22pm UTC](https://boards.straightdope.com/t/marketing-folks-how-to-price-widgets/120323/6 "2002-07-23T23:22:55Z")
> [@](#): > > \*Originally posted by Ringo \* > \*\*On rereading the OP, it appears these are commercial widgets marketed to (perhaps?) industry. The pricing of such is, I believe, easier than retail pricing, because there are fewer pulses to take. > > Before I go further, how big is your market? \*\* Market’s very big - nationally. This is a well-established product sold primarily to commercial customers. But…what do you mean by “fewer pulses to take”? - Jinx ---
**Author:** ![Jinx](https://avatars.discourse-cdn.com/v4/letter/j/c6cbf5/32.png) [@Jinx](https://boards.straightdope.com/u/Jinx)\ **Post date:** [July 23, 2002, 11:34pm UTC](https://boards.straightdope.com/t/marketing-folks-how-to-price-widgets/120323/7 "2002-07-23T23:34:25Z")
> [@](#): > > \*Originally posted by Ringo \* > **Do they really widge like a widget should?** Yes, and we’re competing with Cogswell Cogs! 😉 > [@](#): > > \*\* You know what it costs to make them. The marginal cost will fall as more production is justified…\*\* OK, I’m lost here. What is meant by “marginal cost”? Is it the additional cost of making each consecutive widget? I guess the assumption is that they’re cheaper to manufacture in bulk, right? Is that what marginal costs is all about? I thought “margin” referred to profit. In engineering, margin typically means excess, in a good sense, because you don’t design right smack up against the upper threshold to which something can perform. (This is an engineering position with a marketing twist. Actually, the two will never meet. You won’t find an individual who is the best of both worlds. You will find one or the other OR just a mediocre individual who is equally weak in both areas.) - Jinx P.S. Why don’t businesses realize this??? ---
**Author:** ![Ringo](https://avatars.discourse-cdn.com/v4/letter/r/779978/32.png) [@Ringo](https://boards.straightdope.com/u/Ringo)\ **Post date:** [July 24, 2002, 12:25am UTC](https://boards.straightdope.com/t/marketing-folks-how-to-price-widgets/120323/8 "2002-07-24T00:25:08Z")
[www.drexel.edu/top/prin/txt/Cost/cost6a.html](http://william-king.%5Burl)"]Marginal cost is the cost to make one more widget. Generally, the marginal cost drops as you make more of a particular item. ---
**Author:** ![Ringo](https://avatars.discourse-cdn.com/v4/letter/r/779978/32.png) [@Ringo](https://boards.straightdope.com/u/Ringo)\ **Post date:** [July 24, 2002, 12:29am UTC](https://boards.straightdope.com/t/marketing-folks-how-to-price-widgets/120323/9 "2002-07-24T00:29:33Z")
[Marginal cost](http://william-king.www.drexel.edu/top/prin/txt/Cost/cost6a.html) ---
**Author:** ![Jinx](https://avatars.discourse-cdn.com/v4/letter/j/c6cbf5/32.png) [@Jinx](https://boards.straightdope.com/u/Jinx)\ **Post date:** [July 24, 2002, 12:38am UTC](https://boards.straightdope.com/t/marketing-folks-how-to-price-widgets/120323/10 "2002-07-24T00:38:50Z")
Good ole Drexel! (Near and dear to the hole left in my wallet.) When you care the most to formulate the hell out of everything! If we can’t express our love as an equation, it can’t be expressed! - Jinx, the Cynic Critic