Increase Your Profits Early When Launching a New Product
Starting a Small Business

It may sound shady, but a legitimate, tried and tested way to maximise your profits is to introduce a new, innovative or much improved product or service to customers who are prepared to pay more to have it before everybody else.

Then when demand from these “early adopters” wanes, you lower the price of your product for the rest of the population.

If your product is a prestige product, or new technology, you stand a good chance of success using this method, as your early adopters are far less price conscious. For them, it is all about having something that none of their family or friends…or neighbours and colleagues have.

So, if your product is seen as being of higher quality, or is innovative, this could prove a great way to profit early on in the marketing of the product.

But, unfortunately, like all good things, it will come to an end. For proof, you only need to look at the prices of the latest gaming consoles, blackberries or digital SLR cameras. Prices start high, but demand is also high. Then as more and more people purchase the product, the demand gradually decreases due to the high price, then the prices fall. This will happen to your product too, but with your high margins early on, price falls should not be a problem, especially if your manufacturing costs fall as more and more units are produced.

By charging higher prices early on, you can establish an image of quality and prestige for your product that will last even when you start lowering prices and competition increases.

You’ll also be popular with your distributors because their mark-ups will also be higher, and you’ll likely attract more customers into their stores as the frenzy of purchasing your new product begins.