Napoleon's Pricing Tip: Arbitrage
Friday, November 28, 2014
Napoleon Bonaparte was reputed to have said the following:
A soldier will fight long and hard for a bit of colored ribbon.
The statement demonstrates one very important point about conducting business.
Success comes from the acquisition of labor, goods or wealth at a relatively low price, followed by the sale of that good to someone who values it more highly. The higher value placed on your goods by the other party will incentivize him to exchange goods that you value more highly than he.
What does this have to do with pricing? Napoleon could very easily have charged a few francs for his ribbons. Yet, he priced his military awards by value. Those serving beneath him had to risk their very lives for items that cost Napoleon sums so low that they were not even worth measuring.
When pricing your own goods, always remember that you can earn significantly more money when pricing based upon the value given to your customer, rather than your own costs of production.
Is Napoleon's quote not enough to quell your thirst for pricing knowledge? Why not learn how to price software by reading my book? Or you could just hire me for a pricing consultation.