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HIDALGO COUNTY HERALD FRIDAY, FEBRUARY 13, 2015 3
SBDC
What you cannot afford to forget when
pricing your products
By SBDC Staff
When it comes to finding the
right price for your product or
service, there is no formula and
no single correct answer. Even
within the same industry, what
works for one company won't
necessarily work for the next.
Today, a Google search for the
term "pricing products" returns
297,000,000 results, almost
double the results of a search for
the phrase, "writing a business
plan"--a business process that
does have a formula, and which
can be learned.
Pricing products correctly is
by comparison, an art. It requires
an awareness of the market as it
currently exits, the vision and
ability to see a market as it could
or will exist, and the logic to de-
cide on a figure that will cover
costs, send a message and maxi-
mize sales.
Your starting price defines
you
In 1986, Pixar Animation
Studios was a very different com-
pany than the one we know to-
day. It was a hardware company
whose main focus was on selling
the Pixar Image Computer. In
these early days, the partners of
the company--Steve Jobs, Alvy
Ray Smith, John Lasseter and Ed
Catmull--struggled with figur-
ing out how to run the type of
business they had just started. For
Ed, an early concern was figur-"
ing out how much to charge for
their machine:
"I was told by the presidents
of Sun and Silicon Graphics to
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start with a high number If you
start high, they said, you can al-
ways reduce the price; if you
lowball it and then need to raise
the price later, you will only up-
set your customers. So based on
the profit margins we wanted, we
decided on a price of $122,000
per unit. Big mistake. The Pixar
Image Computer quickly gained
a reputation for being powerful
but too expensive. When we low-
ered the price later, we discov-
ered that our reputation for be-
ing overpriced was all anyone
remembered. Regardless of our
attempts to correct it, the first
impression stuck." - Ed Catmull,
Creativity, Inc.
Ed Catmull acknowledges
that for a complex question like
pricing, there is no simple answer.
Rather, focus on the bigger ques-
tions: How will you meet your
customers' expectations? How
will you invest in further devel-
opment of the product? Finding
answers to questions that keep the
'bigger picture' in mind, should
help you figure out the most ap-
propriate price for your product.
Your price positions you in
the market
While Ed argues against
"start high" pricing advice, Tim
Berry, the Founder of Pale Alto
Software, believes that pricing
too low is the real risk:
"There is no algorithm for
pricing. It's mostly instinct. Cov-
ering costs acts as a floor, not a
useful indicator Pricing is your
strongest marketing message and
most startups should price high,
position themselves as premium
value with premium price. Oh,
and one of the common fallacies
around is that startups are sup-
posed to price below the compe-
tition. Wrong. Higher is better, by
far; and then back that up with
value." - Tim Berry, Founder of
Pale Alto Software
Tim and Ed may disagree on
low versus high pricing but both
recognize that there is more to the
question than a "tried and tested
process." According to Tim, you
set your pricing based on your
situation, the strategy you are
pursuing, costs to produce, your
competition, the weather, your
instinct--basically, whatever is
most important to you at the time.
And while there is no formula for
the right price, there are several
mistakes you can avoid making
when you get to this stage of plan-
ning:
Mistake 1: Thinking it's best to
be the lowest price provider
This approach may work for
businesses that sell undifferenti-
ated commodities but strategies
that center on being the "lowest
price" usually require a lot of ini-
tial investment and a very large
software costs, installation of tele-
phones, new carpets, and what-
ever other miscellaneous ex-
penses may come up. If you do
not take these costs into account
when setting prices, you may run
out of money
Your price affects your business
operations
Beyond the risk of sending
the wrong message, pricing your
product too low could result in
having to compromise your mor-
als and your mission as you fight
to remain the company with the
lowest prices• Seth Godin refers
to this downward spiral as "the
tyranny of the lowest price" and
provides a perfect example to
help you put this notion into per-
spective:
"To cut the price a dollar on
that ebook or ten dollars on that
plane ticket (discounts that few,
in the absence of comparison,
would notice very much) you
have to slash the way things are
edited, er people are trained or
safety is ensured. You have to
scrimp on the culture, on how
people are treated. You have to
be willing to be less caring or
more draconian than the other
guy." - Seth Godin, Author &
Entrepreneur
The solution? Get known for
something other than your price.
What is it that your product stands
for or that you would like it to
imply about your company?
If you have multiple products,
your own prices can affect sales
If you're pricing more than
one product, beware! In 2012, the
Yale School of Management pub-
lished a study, which revealed
that if two similar products were
the same price, the cbnsumer
would be much less likely to buy
either of the products than if there
were minor differences in price.
In fact, the study found that when
participants were given the op-
tion to buy two different brands
of gum at the same price, only 46
percent made a purchase. By con-
trast, when the two packs of gum
were priced only a couple of cents
apart, 77 percent of the partici-
pants bought a pack!
This doesn't mean you have
to. price every product differently,
just that you may want to keep
this in mind when your products
are incredibly similar. Done right,
you stand to do more than save
sales; you could very well in-
crease them.
Consider the bigger picture
Hopefully this list will get
you thinking about more than
just recouping product costs. As
we've seen, pricing is essential to
branding and to the future of your
company so take the time get it
right but also to consider the big-
ger picture. Putting a number on
your product doesn't answer the
Iola Barka Diaz
Iola Barka Diaz
Iola Barka Diaz, 90, a resi-
dent of Silver City, New Mexico,
passed away Wednesday, January
28, 2015. Iola was residing at her
daughter's home in Peoria, AZ.
A memorial service was held
on Tuesday, February 3, 2015 at
Baca's Funeral Chapels in Silver
City. Inurnment and concluding
services were held on Wednesday,
February 4, 2015 in Lordsburg,
NM at Shakespeare Cemetery.
Iola was born June 18, 1924
in Gila, New Mexico to John Luce
Barka and Pauline Polanco. Iola
was raised in Gila, New Mexico.
She, along with the family, spent
their time traveling between Gila
and the Black Range where her
father was working in construc-
tion for O. D. Coward Construc-
tion building what is now the
highway between Hillsborro and
Silver City. Iola's love during her
early teens was basketball, and
she broke scoring records with 67
points in one game. In her late
teens, she was recruited by the
Goodyear Corp. during the WWII
and trained to be a riveter. Iola
worked at the Goodyear Plant in
Arizona making Sea Planes, as
she was a "Rosie the Riveter"
during the war effort.
As an adult, Iola married
Pablo Diaz. She managed her own
restaurants in Los Lunas, New
Mexico. She and her husband,
Pablo, owned a small farm where
they raised their children. Iola and
Pablo moved back to Lordsburg
in 1972. She moved to Silver City
in 1979 after Pablo passed away.
Iola spent her time between Sil-
ver City and Peoria, AZ as she re-
quired specialized medical atten-
tion.
Iola is survived by her three
children, Frank and his wife
Yolanda Diaz of Espanola, N.M.,
Doris and her husband James
Alarcon of Peoria, AZ, and Eddie
Joe and his wife Margaret Diaz of
Silver City, NM. Also surviving
Iola are her grandchildren,
Armando D. Estrada, Jonathan E
Estrada, Monica Lopez, Natalie
Diaz, Briitany Diaz, Danielle
Diaz, Isaac Diaz, and Nicholas
Diaz; her great-grandchildren,
Jonathan James Estrada, Anthony
www.smithfordlordsburg, com
Peaches scale implementation, questions that will steer your busi- James Estrada, Pablo Lopez,
DQ murderer Mistake 2: Forgetting that your ness--how will you provide Nathan Lopez, Jacob Lopez,
price is also your "marketing value? How will you develop into Adam Lopez, Victoria Diaz-
message" the future? How will you adapt Chavez, Brian Daniels, Gabriella
parole hearing
next month
Walter Scott Finnell, the man
who shot and killed Richard
Bejarano in a robbery at the Dairy
Queen in the 1980s is coming up
'for parole on March 2, 2015. He
also shot and injured local resi-
dent, Karen (Bejarano) McDonald
during that incident. She still suf-
fers from the ramifications of that
injury.
McDonald is asking local
citizens to sign a petition to keep
Finnell behind bars. She will take
these petitions to the hearing next
month, where she will also testify.
Petitions are available at
Saucedo's Super Market and
Bookkeeping Plus.
How do you want to be per-
ceived by the outside world?
Price too low and chances are the
opinion of your product will be
low or you will attract an audi-
ence that isn't the one you
wanted in the first place. Don't
forget that your pricing sends a
message. It says "I believe I'm
worth this much" or "this is the
amount of value you're going to
get out of this product/service."
In short, it's your positioning. Be
sure to carefully consider what
that is before you settle on a price.
Mistake 3: Underestimating
your real-life costs
Pricing your products based
on your gross margin analysis
alone is a bad idea. You also need
to consider you overheads --your
rent, payroll, marketing costs, util-
ity bills, insurance, hardware and
Hidalgo County
,00I-ii00RALD
# New Mexico Press
Association Member
Hidalgo County Herald (USPS
lip
020697) is published weekly by
Hidalgo County Herald in the City of Lordsburg, County of Hidalgo,
212 E. Motel Drive, Suite B, Lordsburg, New Mexico 88045-1948
52 issues a year. Subscription rates vary. Subscription rate is $40
per year by USPS mail, $25 per year by email. Requests for correc-
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Hidalgo County Herald should be directed-to the editor. For further
information on the Hidalgo County Herald's approved grievance
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not be returned. All information contained herein is copyrighted 2015
by the Hidalgo County Herald. All photos/stories, unless stated, are
written by our staff• POSTMASTER: Send address changes to Hidalgo
County Herald, 212 E. Motel Drive, Suite B, Lordsburg, NM 88045-
1948. Periodicals Postage Paid at Lordsburg, New Mexico.
PUBLIsHER/EDITOR:
Brenda Hood
ADVERTISING MANAGER: Glenda Greene
PHONE: 575-542-8705
FAX: 575-542-8838
E-MAIL hcherald@aznex.net
to competition?
An archive of SBDC Busi-
ness Reports can be found at
http://www.grantcounty
beat.com/index.php/archived-
items
Small Business Develop-
ment Center Prospective entre-
preneurs and business owners can
get free one-on-one help writing
business plans from Western New
Mexico University's SBDC in
Watts Hall at 500 18th Street. As-
sistance is available to entrepre-
neurs who are starting a business
or wanting to expand an existing
business. These services are avail-
able at no cost. Call 538-6320 for
an appointment with a business
advisor, or email
sbdc@wnmu.edu. More informa-
tion may be found at
www.nm sbdc.c om/silvercity/
index.html
Daniels, Natalia Daniels, and
Serena Daniels; her sister Alice
Barka of Lordsburg, NM; and
brothers Eddie and James Barka
of Gila, NM.
She was preceded in death
by her husband, Pablo A. Diaz;
son Roger Diaz; her Thomas
Frank, William and John Barka,
Inez Hood, Irene Hood, and Mary
Elizabeth Barka.
Sincere thanks to famtly and friends
who offered calls, cards, flowers, food
and, most importantly, prayers, during
our recent time of need. Special thanks
to the St. Joseph's Church Choir,
Ft. Weber and the St. Joseph ladies
who helpedwith the reception.
YOur kindness and love were of great
comfort toour family during this
ifficult time.
Check our our great
selection of Tires at
competitive prices!
Frances Mae (Fritz) Krulic
Frances Krulic
Frances Mae (Fritz) Krulic
quietly left us in her sleep on Feb-
ruary 1, 2015. She was born Sep-
tember 21, 1931 to the late Henry
and Grace (Wolfrom) Fritz.
Frances was united in marriage to
Jack Gauthier on June 18, 1950,
until his death on January 30,
1987. From this union, she be-
came the beloved mother of
daughters: Sherrie Eimet and hus-
band, Dave; Melanie Field and
husband, Gary; Denise Olson and
husband, Jeff.
Frances was united in mar-
riage to Charles R. Krulic from
June 25, 1988, until her death. She
was a member of the Oaklawn
United Methodist Church of Hot
Springs.
She is survived by her
spouse, Charles, as well as sisters,
Luella, Dorothy, Elaine and
brother, Billy. She is also survived
by grandchildren Heather Field,
Chad Field, Kristen Olson, Erik
Olson, Meghan McCallie and
husband, Austin; great-grand-
children Ethan Spencer and Day-
ton Field; as well as a host of be-
loved friends and extended fam-
ily which include the wonderful
staff at the Abundant Life Care
Home.
The daughters are preparing
a Celebration of Life ceremony
for all who wish to attend 2:00
p.m. Saturday April 4, 2015, at
Caruth-Hale Funeral Home
Chapel in Hot Springs, AR.
The family requests dona-
tions to the Alzheimer's Associa-
tion, or a charity of your choice,
in lieu of flowers.
Guests may register "at
www.caruth-hale.com.
John D. Neal
John D. Neal
John David Neal, loving and
devoted husband, father, grapd-
father and friend, passed away
February 4, 2015 in Dallas, Texas.
Memorial services were held Sat-
urday, February 7, 2015 at Abbey
Chapel.
He was born July 13, 1934
in Ozark, Arkansas, to Oliver O.
Neat and Nevada L. Dunford Neal.
He graduated from Longview
High School in 1952. He married
Phoebe Louise Byers on October
1, 1953.
He was an Army veteran. He
served in the U.S. Border Patrol
from 1958-1984 and was station
in E1 Paso, Texas, Lordsburg, New
Mexico, Sierra Blanca, Texas and
Marfa, Texas.
Survivors: Children Larry
Neal and Diane; Danny Neal and
Marlys; Nancy Griffith; Deanna
Neal; and Kevin Neal and
Michael Chapman.
John attended the First
United Methodist Church-Dallas
and was a member of the
Aldersgate Class, where he had
many friends. He also was a mem-
ber of the American Legion, BPO
Elks, Knights of Pythias, AARP
and Fraternal Order of Retired
Border Patrol Officers.
Memorials may be made to
the Crossroads Community Ser-
vices at FUMC-Dallas or Na-
tional Border Patrol Museum, E1
Paso, Texas.
Condolences may be offered
at www.RestlandFuneralHome
.com
Baptist Church l
of Lordsburg I
3rd &Animas Streets I
L0rdsburg, NM 88o451
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