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TJ Tedesco

View from Mount Olympus

By TJ Tedesco

About TJ

T.J. is team leader of Grow Sales, Inc., a marketing and social media services company operating at the intersection of compelling content, clear vision and quality communication practices. In this blog, fire is a metaphor for print. Hang on, this ride will be weird...

Prometheus crept into Mt. Olympus, stole fire, returned to the lowlands, ran from house to house distributing it, got caught, was chained to a rock, lost his liver to a huge ugly bird and was rescued by Hercules. Leveraging his fame, Prometheus started Fire Enterprises Inc.  (FEI). Since fire was the hottest technology of the time, company success came fast and furious. Two generations later, fire isn't such an easy sale. Now led by Prometheus' grandson Org, FEI's growth is non-existent, competitors are pounding and prices are in the toilet.

A Solid Business Footing: The 7Ps – That’s Right, Seven! (Part III of IX)

From last week...

“I’m on board,” Zoot said. “It sounds like FEI’s product offering always has been—and should continue to be—more than bringing torches to hearths.”

Now, on to part three of this nine-part series. Remember, fire = print.

Marka said, “Yes. It really is that simple.” She erased the white board scribbled:
The Second P: Price
“How much can we expect in exchange for our products?” Marka asked rhetorically. “Numo, this is your playing field.”
“There are many factors to consider when setting prices,” Numo started, cracking his bony knuckles. “There’s usually an inverse relationship between price and units sold.”
“No kidding,” Zoot interrupted. “When we raised prices on the south side of Olympus last year, we certainly sold less.”
“Ah, but did we make more?” Numo asked, a crooked smile slowly spreading across his face.
Zoot shrugged.
“We made a higher percentage profit,” Numo said, helping his friend out. The lower sales volume benefitted FEI and, ultimately, Org and I decided to...”
“...Hold the new prices right where they were,” Zoot recalled glumly.
“If the relationship between price and unit sales is inverse, market price is considered ‘elastic,’ ” Numo lectured.
“Wouldn’t every product have an elastic price?” Lucy asked. The rest of the tribe was thinking the same thing.
“Often, but not always,” Zoot said. “We don’t need to look beyond our own company to find an example of an ‘inelastic’ pricing in action.”
“For the first couple years of FEI’s history, we were the only fire vendor around. Prometheus could’ve charged anything he wanted,” Numo explained. “FEI had a monopoly on fire and buyers were willing to pay almost any price for what they—correctly—perceived to be a valuable service. With little correlation between price and units sold back then, fire pricing would’ve been considered very inelastic.”

Join us next week as Marka, Zoot, Numo, Org and the gang complete their discussion of the second P: Price.

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