How to price your product? let’s learn a business lesson from Paper Wasps (#4)
We all struggle how to price a product or even a service and it’s always ad-hoc, sometimes too low, sometimes too high but many a times we never do a proper research. You will be shocked if we say that this happens in nature too, among our wildlife and in our forests on a regular basis. Let’s learn a business lesson from paper wasps on how “their price their product”.
How they price their product? A business lesson from paper wasps.
The wasps are divided into two main castes: “helpers” and “breeders”.
The helpers’ main job is to look after the children of the dominant breeders in return for being allowed to live in the nest. The researchers who were working on this, to test how the equation works essentially interfered in the job market by increasing the number of nests around the hedge. The sudden arrival of new “companies” seeking staff prompted some helpers to show up less often at their own nest and instead go to another one where working conditions were better.
The breeders then responded to this loss of labour by allowing their helpers to do less work. It is found that the amount of work, how boss behaves with the “workers” and also how workers choose a nest or negotiate terms all depended on the surrounding “demand-supply” equation.
THE BUSINESS LESSON TO LEARN:
Researchers findings reveal intriguing parallels between wasp populations and our own business world: a bad deal is better than no deal, so when competition increases so does the risk that you have to accept a lower price for what you offer.
Also demand-supply equation matters a lot in pricing your product. It is found that the amount of work to give, the compensation, the pricing, how a boss behaves with the “workers” and also how workers choose a job or how a client chooses a product or negotiate terms all depended on the surrounding “demand-supply” equation.
So knowing all these surrounding “demand-supply” and competitive forces are vey critical else you might easily run-out of customers. Even today I don’t see a formal competitive analysis or demand-supply analysis done by our startups and they always push to the end – never and it is one of the most critical tasks and a high priority task without doubt.
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