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Industry Pricing Trap

How do you price a scarf that’s not really a scarf? Let me introduce you to a line of scarves that’s stylish, but also equipped with a high light-reflecting property. If you are a privacy-conscious person and want to “punch” back any unwanted paparazzi flash right back into the camera lens, spoiling the picture – that is an impressive trait.

Using cost and industry standards as a benchmark, it would be priced as an expensive scarf, about 80$ or something, which is a bad price when you can get a hand-knit scarf for 30-60$ no problem. If the classic competition-based analysis was applied, the reflective scarf would look unsaleable. But every scarf keeps your neck warm and emphasizes your style. This reflective scarf does that, but it also does something else: it keeps you looking both camera-ready and paparazzi-proof.

That means that its competition is not other neck-warmers, but other show-off pieces. The price also has no business being accessible to regular people, because they will not have any use for its unique paparazzi-repelling feature.

The price is therefore correctly set at between $268 and $478, so it’s competitive with higher-end designer scarves, although its makers, London company “The Ishu” is not a luxury brand.

Be wary of comparing your price within your industry, but not your market. The difference not only exists, but it can also be fatal.

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