What’s a product worth example

What to charge?In “Determining what a product or service is worth“, we eluded to an Excel tool that would automatically calculate what you should charge for your product or service. Of course we also gave the caveat to not blindly use the numbers provided – they are for reference only and the tool’s main goal is to make you think through each layer in your prospect’s company to figure out where you stand.

Well, here’s an example analysis – please leave a comment if you want the actual Excel file behind this post, I’ll shoot it right over your way.

Let’s suppose that you’ve spent several months selling an engineer on your gizmo, and you put together a $25,000 proposal and send it off in the mail to her. Then you sit back and cross your fingers. Your spirits are high because through hard work you know that the engineer values your product at $25,000 and that’s exactly what you charged – so it’s a no-brainer.

But what’s actually happening on the other end with your proposal?

The following table shows how your gizmo is valued by the various stakeholders and their respective pulling weight.

Stakeholder

Perceived value

Relative pull

Engineer

$25,000

15%

Engineering Manager

$20,000

10%

Purchasing Agent

$12,500

20%

CFO

$17,500

40%

CEO

$18,000

15%

Plugging these values into the Perceived Value Equation yields a PV of $17,950. You’re $25,000 proposal suddenly looks 39% overpriced! Chances are that your proposed solution may solve the engineer’s problem, but the rest of the team has a smaller need and your gizmo is overkill. Your sale is in major trouble.

The following screenshot shows what this analysis might look like in the accompanying Excel file (again, leave a comment asking for the file if you want it).

Excel - What’s a product worth

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3 comments ↓

#1 DAR on 06.06.10 at 10:41 am

Enjoying your article, thoughts and insights. I would appreciate if you would send the Excel file outlining Perceived Value Analysis

#2 solarpanel on 04.22.11 at 5:21 am

What’s a product worth example

is very key

i think so.

#3 Nana Israel Addo on 04.27.11 at 3:55 pm

Hello,

I am Nana Israel Addo from Takuwa community. Am a representative for the local gold miners here in Takuwa community,Ghana. We have capability of producing between 300-350 kilos of gold dust monthly.

The product available below:
Commodity:—–Gold Dust
Available Quantity:——-500kg
Origin: ——–Ghana
Quality: ——–22+ carats
Purity:———- 96.67%
Price:———– $25,000 per kilo

We also do have gold bar too.

I shall be grateful to furnish you with any further information that you may require after hearing from you and shall consider it a privilege doing business with you to foster a cordial and long-lasting relationship between both parties. Below are my contact information you can reply to me and i will send you an FCO.

Name: Nana Israel Addo
Email: nana_addo2011@hotmail.com
Phone Number: +233-200408673

We are waiting your purchase interest and quick responses.


Thanks for your Co-Operation.

Nana Israel Addo

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