How to MSRP Yourself in the Foot

As we’ve explained before, price has an enormous, almost decisive influence on a consumer’s perception of a product. The twelve-dollar cheeseburger has a much higher bar to clear than the four-dollar one. A great TV for $300 can be a lousy one for $600. Obviously, this is reflected not only in the buying decision but in our retrospective judgment of that purchase, most evidently in publicly posted reviews of said product.

Which sucks for us. Everything we sell was originally reviewed under a different and much higher price tag, and hence judged against a much stricter curve. Something can still be a five-star deal even if it originally got three-star reviews.

Ahem. So. Here’s the Definitive Technology Sound Cylinder. It’s a portable Bluetooth speaker. Definitive has a pretty good reputation among audio geeks. By most accounts, the Sound Cylinder sounds great, travels well, and comes in handy as a tablet stand, too.

But does that seem worth two hundred dollars?

Because that was Definitive Technology’s original list price for the Sound Cylinder. Now, obviously, we all want to be paid well for our work. Yay, money. But for a portable Bluetooth speaker to be worth a double Franklin, it would have to- well, actually, we can’t even think of anything a portable Bluetooth speaker could do that we would pay 200 bucks for.

Maybe they saw the Beats Pill and thought “our speaker sounds better than that, we should price it higher,” misunderstanding that for people who buy the Beats Pill, sound is beside the point. Maybe they were trying to live up to the burden of a l33t name like “Definitive Technology”. Maybe they really did crunch some numbers and spat out the conclusion that $200 is the price the market would bear.

In any case, the Sound Cylinder now goes for sixty bucks or so, eliminating the one persistent negative thread in its reviews: it’s overpriced. And of course, now, today, here we are further stamping out that quibble. We get to sell you a really good speaker for your tablet, laptop, or phone at a really good price. We win. You win. America wins.

But Definitive Technology will never know how the Sound Cylinder might have fared had it been sold at a more reasonable price from the get-go. That’s the thing about MSRP. When you aim to use MSRP to Maximize a Superior Rate of Profit, you Must Satisfy Raised Perceptions, or you’ll find your Marvelous Stuff Reviewed Poorly. And that would be a Major Shame, Right, People?