How To Raise Prices

Peter : On Rad's Radar?
| Peter Radizeski of RAD-INFO, Inc. talking telecom, Cloud, VoIP, CLEC, and The Channel.

How To Raise Prices

Yesterday there was an article in The Atlantic about a global wine shortage. Apparently, we have had smaller grape harvests in the last couple of years. When you consider that wine consumption is up (and so many new winemakers including Dave Matthews and other celebs have entered the market), it isn't surprising. Plus add Climate Change, which has to affect not just grape harvests but all crops globally.

But this reminds me of the chocolate scare of a few years ago when cocoa crops were declining. Chocolate was in danger. Cue price hike!

What a great way to raise prices and in turn profits - cry shortage. No real way to do that in telecom despite the fact that most markets are flat or shrinking. Fiber, especially rural fiber, is probably the only scarce resource in telecom now. (Believe me, try to get 10MB x 10MB with SIP trunking into some parts of Texas!)

AT&T just tried to raise special access rates but there was a backlash.

Scarcity is the value. Scarcity in skills or bundle or integration or deployment or features is the way to go. Following the crowd, doing what everyone else is doing, and misunderstanding supply and demand are ways to lose in the marketplace.

Right now, I think UC is the exact opposite of wine or chocolate -- there isn't much demand for it. "Hosted PBX/UC grew the most of any VoIP service in 1H13 as businesses, particularly larger enterprises, continue to turn to hosted services as a viable alternative to premises-based solutions," according to Infonetics. The demand is in the Enterprise space. Most of the SMB market just wants cheap, reliable VoIP. Or there dealer still has them hooked up to a premise PBX. SIP trunking is growing - "Driven by activity in North America, SIP trunking spiked 23% in 1H13 over 2H12" - due to the fact that cablecos sell SIP trunks and PRIs are fading away.

Another example: web conferencing. This is a great review of 3: Webex versus GoToMeeting versus MyTrueCloud.

It is unfortunate that telecom doesn't have a scarcity issue or prices could be going up instead of down.

I am going to close on a quote from Nicholas Bate: "A competitor is not a threat so long as it is observed in a calm and detached manner: what can we learn from them and their successes? It is a threat when we become fearful, slash prices and try and ride in the wake they cause in the market. That's when we drown."

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