Every Company Needs a Good Map

This is the fourth in a series of posts on the issue of setting prices too low.

After rereading yesterday's post about spreading beneficial products, I see I got ahead of myself somewhat. The difference between a desire to spread the benefit and the fear of excess greed is that in the first case they see the pricing as an impediment to having the product adopted by a large audience. In this case, the issue is a fear of being labeled as a usurper; that people will have a negative association with the product or the person because the company is making too much money. It is as if making money was evil. Making money is not evil. Obsessing about making money to the point that you allow or force others to come to harm, you commit crimes, or you pressure others to lie is evil.  The thinking goes like this:

"If I charge too much people will think I am greedy, and will not buy my product."

It is usually difficult to over-charge for a product under normal circumstances. In crisis situations, such as after a disaster, there are always people who gouge as much as they can. This last situation is one where a person can realistically worry about the greed perception. In a market that is open and operating properly, there are usually enough alternatives to the product or service that you offer that will exert pressure on you to be reasonable with your price.

In some ways, it is a good thing to worry a little about over-charging. It shows a respect for your customer, a desire to provide your product for a price that is affordable. Unless people are forced to buy your product, there really is little fear that you will get more money from people than they are willing to pay. For the most part, customers have an option not to buy your stuff.

The demand for an item can become a requirement in the areas of healthcare and medicine. For some people, there may only be one treatment that will work to save their life or maintain their current quality of life. It is at this time that a person can feel that the pricing on a medication is excessive. It is expensive to develop medicines. Therapies take years to establish and prove. This issue of drug price setting is not something that can be solved easily, but it is an area where government intervention has to be tempered with the understanding that the source of future medications not be compromised. 

If you are looking to start a new business, or introduce a new product, think more about making sure all of your costs are covered before you worry about over-charging. Be reasonable, but remember, you will probably not sell the item yourself, and your partner companies are going to want to charge for their services. They make their money by taking a big chunk of the selling price. Be certain to set the selling price high enough to cover the cost of all of the mouths that need to be fed. 

A little Google search on the subject, "Fear of Greed" turned up some interesting things. Most of the articles dealt with salary negotiations where people were afraid to ask for an amount they felt was reasonable for their efforts and or skill. The great thing here is that the salary negotiation is exactly the same as pricing a product. You are asking to be paid on a piece by piece basis instead of an hourly basis in most cases. 

Some articles on the greed subject were focused on habits that keep you from being rich. People who espouse various thought schools about becoming wealthy seem to all agree - one of the major impediments is a fear of criticism. Unless you are trying to get rich by ruining others, the only people who should criticize you are people who are jealous of your skills or ability.

There is a saying that is often said, which is incorrect that I will correct without repeating the previous error:

Those who can, do; those can't, tax.

Remember that the next time you see something being inhibited by a new regulation or tax.