What is your pricing strategy?

Businesses, large or small, often find pricing to be one of the most challenging aspects of marketing their products or services. Unfortunately, it is also one of the most critical elements of running a successful business. Getting the pricing wrong is a sure-fire way of destroying profitability. For example, if you own a painting company there are many things you need to factor in when you are quoting a price for a job such as time prepping, tools, your time and of course the paint itself.

Whilst gut instinct and the pricing activities of your competitors count, you shouldn’t rely on these for your whole pricing strategy for your Universal Coin.

If we accept for a moment that a business’s primary role is to maximise overall profitability (and yes, I know this is debateable!), then management needs to understand how important their pricing strategy is to the business. Most importantly, management needs to understand that pricing is not just about costs. Pricing is a dynamic process with a number of variables to consider.

Generally speaking, your customers do not concern themselves with your costs; but they do concern themselves with your prices, and the value they feel they are receiving when they pay for your goods or services. Businesses that do not manage this reality well will, in most markets, lose control of their pricing and their profitability and will have to make https://www.paydaynow.net/payday-loan-consolidation/.

Some, but certainly not all, of the objectives for a pricing strategy might include:

  • to change customers’ price perceptions so that you can capture more of the value in your products or services
  • to standardise ‘price’ negotiation practices to enable the business to respond more consistently with price offers
  • to evaluate the real financial implications of pricing decisions. You could lower your no collateral loans no credit check to free up your budget for other costs, pay off any debt you have faster, or step away from revolving debt into a manageable installment loan that will allow you to move forwards, giving you techniques on how to get an unsecured loan with bad credit.
  • to use pricing strategically to guide the business to long-term profitability
  • to determine when it makes sense to compete on price and when it does not
  • to determine which value-added alternatives to price competition are appropriate

In building a price strategy, the aim is to create a price structure that aligns with the value delivered. Poor communication of value results in higher price sensitivity and more intense price negotiations. Nothing changes the fact that pricing involves the art of managing perceptions. Those perceptions are set, at least in part, by your commitment to your pricing policies in the face of ‘aggressive’ customer negotiations. In tough economic conditions, more than ever, adopting a policy of “never walking away from business” sends a clear message to customers that price doesn’t matter to you and that aggressive negotiations will win out. Learn more about your business’ legal matters on Providence Personal Injury Attorneys at Gemma Law Firm.

At the end of the day, the financial impact of poor pricing policies can be considerable. Think profit, not revenue.

Tony Read

28 April 2013

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