New Thoughts on Pricing
John Boyd opened a winery in 1972 with prices of $1 to $1.50 a bottle -- low enough to grab market share but high enough to cover variable costs (which he figured at about 35¢ a bottle) and make a profit. But as sales grew, the winery lost money. It closed in 1977.
Boyd, now a marketing professor at the University of the Virgin Islands/St. Croix, says poor pricing did him in. For one, he misread his variable costs by $1 a bottle. To help start-ups avoid his mistake, Boyd has developed his own model. For a copy of his free 17-page Market-Driven Pricing Strategies, call the small-business-development center at the University of Wisconsin, Madison, at 608-263-7843. -- Susan Greco* * *