Inventors – Pricing for a Quick Launch
{Don Debelak’s new book, Turning Your Invention into Cash is now available on Amazon for $3.49. Go to Amazon.com and enter inventions Don Debelak to purchase. From the author of Entrepreneur Magazine’s Bringing Your Product to Market.}
Founded in 2002 by Al Youngwerth, Rekluse Motor Sports is the motorcycle industry leader in clutch performance technology and innovation .
He knew he would face major resistance from the professional biking industry because automatic clutches were considered for beginners or girls. But Youngwerth worked out a plan to overcome this obstacle.
First, he knew he needed to have the lowest cost possible, so he decided not to take a salary for the first two years. Then to create demand he sold the clutches for a loss, which is something that the Japanese did with VCRs. For the first six months, every clutch sold represented a loss for the company. Finally, he worked on getting racers to use his clutch.
So did it work? You bet it did. The low cost helped reluctant buyers make the purchase and try it out. Also as the demand increased, the production costs dropped and the company started making a profit on each item sold. Finally, when racers who were using the clutch started beating those who used a manual clutch, the professional bikers started thinking again about the benefits of an automatic clutch. Now Rekluse Motor Sports in a big success.
So what can we learn from Youngwerth’s example? Youngwerth really proved himself to be the true entrepreneur — taking big risks in hope to put his company at the top. This may not be for everyone but we can still look at some of the low risk methods Youngwerth used to get started. First, if you can afford not to take a salary for a year or two, this will really help your company get started. When you start to draw a big salary before sales come in, it can kill the momentum of your company. Second, if you want to change the image of your type of product, you will probably need to start from the top down. Hobbyists or enthusiasts usually look up to someone in the industry and if he or she starts using your product, then so will those who look up to him or her. A mere endorsement usually isn’t enough, the person needs to use your product in a public and visable way. This can be key to changing people’s perception of your product.
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