This article will benefit business owners, MDs and CEOs and anyone else involved in developing and executing a Pricing Strategy.
Do you feel you are getting the best return for your product/service? Are you achieving the price levels and margins you deserve for the value you create for your customers?
If executed well, your Pricing strategy has the potential to make a significant impact on the growth of your bottom line, if executed poorly it can decimate your profit.
Pricing is widely recognised as being the most under managed aspect of the six marketing P’s.
Indeed, recent studies have shown that the majority of businesses are not able to achieve the prices, and therefore the margins, they want to.
A quick test think about your pricing strategy:-
- Do you have a well-crafted Value Proposition that clearly shows the value of what you do in your customer’s terms?
- Do you know what your customers want and are willing to pay?
- Is your pricing approach based on the value you deliver for your customers?
- Are you satisfied you are getting the returns you deserve?
- Do you understand your customer’s business model and what drives value for them?
- Are your margins continuously under pressure?
- Do you know why you price the way you do?
- Are your prices dependent on what your customers demand or on what your competitors are doing?
What are your answers?
Benefits – why bother?
Developing the right pricing strategy and executing it well is essential to the success of your business.
However, there is more to a good pricing strategy than simply what you charge your customers.
A good pricing strategy should reflect how you add value to your customer’s business and to their customer’s, how you can incentivise your customers to drive value for you, how your team will execute your strategy and crucially that it achieves the margins you want. There are a number of areas that need to be covered when developing an effective pricing strategy.