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Price Test Flowchart for an Undeveloped Product
What should you charge for a product? Better yet, what should you charge for a product that you haven't even developed yet? Sort out the price - and profit - for a product before you invest the resources into developing it.
To see a much larger version of the graphic and the supporting text, visit this link:
The general idea is to establish a Google Adwords campaign to rotate ads that feature different prices. The ads direct visitors to a landing page, which describes the details of the product as it would be when it is ready for purchase.
An important purpose here is to spend a small amount of advertising money upfront – before creating the product – to determine if the product will be profitable enough to bother developing in the first place.
Another important purpose of this test is to determine the response levels of four different prices. The responses are then evaluated to determine which price is the most profitable. Of course you would also evaluate the results against your business intent:
♦ Do you want to use the price that generates the highest ROI?
♦ Or do you want the price that generates the greatest number of responses with an acceptable ROI?
The campaign takes visitors through a sales funnel, but at the point of sale, does not take the money from the consumer. Instead, the potential purchasers are offered to register for notification when the product is ready.
Of course not all will enter their details, but those that do could be considered to be hot prospects.
The response metrics for the campaign are evaluated for each ad to determine which ad attracted the most potential buyers. The price information is evaluated against the product development costs to establish a general sense of the viability of the product. If the product does not appear that it can be produced and sold at a desired profit level, then the product is not actually produced.
If the product does appear to be able to be developed and marketed at a profit, then a business executive could move forward with confidence.
Either way, the initial testing provides an opportunity to invest a small amount of funding upfront to determine one way or another, whether a potential product has legs.
To view the larger graphic and documentation, visit this link:
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Page Updated Last on: Aug 08, 2010