You have a new version of an old product, and it’s great: better functionality for most users and lower production costs than previous models. You’ve hit a technological home run. But how do you price it?
This is a nice problem to have, but it’s definitely a problem. Set your price low and you earn moderate profit margins on large volume—if the low price doesn’t spook buyers into thinking it’s a low-quality product. Price high and you earn high profit margins on low volume, as most users are slow to adopt new technology.