Common notion is that if a product or service is priced low, the chances of its sale are higher. However, this is not always true. I found one very rarely purchase a productive service at a discounted price. I almost never take anything in work or in personal life which is offered for free. I'm sure there are many customers like me, the most important aspect is that we need to determine which costs are relevant to us and which are not. I tried to explain through an example, I wrote a book, which my publishers priced at rupees 648 per copy.
By cost of publishing the book was around about 1.2 lakhs. Now the publisher was selling the book through various channels like Amazon, Goodreads, etc. Amazon Amazon had put a price of rupees 1250 for the book. The publisher, offered to sell me copies at 200 rupees I bought quite a few. I tried to sell my copies through a bookstore in Bangalore, the bookstore offered me rupees 300 per copy. However, after some time, I was unable to sell any copy and I had quite a few left with me.
Now I had to decide whether I continue to sell at the same price, or at least the cost price, or I sell them at a lower price. If I did not sell at a lower price, chances were that I would never be possibly able to sell the remaining copies. Another common notion is that if we increase the price of a product or a service, the demand for that product or service will come down will decrease. However, this is also not always true. Now if a product of service is price inelastic, then lowering or increasing the price of the product will not affect the demand. I quote an example from one of our experiences We face a situation in Bhutan, where we had to sell our systems to Bhutan Telecom.
Now, Bhutan telecom was totally dependent on Siemens for supply of all its ID solutions. The changing from Siemens system to any other vendor would mean a huge investment for Bhutan Telecom. And as Bhutan as as a country itself is quite cash strapped. It is very, very difficult for them to undertake very large investments. Now, consciously, we always quoted low price to Bhutan Telecom, but whatever we quoted, was always paid to us. No, in most cases it was we got the price, whatever we quoted