Considering Product Life Cycles

Many product categories have significant evolution and life cycles that may affect pricing decisions.

For example, with personal computers and software, the trend is toward shorter and shorter product life cycles. In fact, it now takes as little as six to 12 months before new technology and products are introduced in these multibillion dollar categories. As a result, product pricing cycles have also accelerated to match, with introductory pricing decreasing to significantly lower levels only six to eight months later.

These continuously evolving high-tech categories make it difficult for companies to recover development costs, accurately predict sales volume, afford planned marketing support, and price products accurately in relation to a competitor's products.