Thursday, January 21, 2016

Pricing Strategies

Pricing is one of the hypest job in the business right now. By mastering this art, you are supposed to be able to raise profits while appearing cheaper to customers. Obviously, mastering pricing and taking it seriously is a real leverage to profitability growth.

  • Take pricing more seriously: this is exactly what is going on in retailing right now. Pricing positions are blossoming, with senior profiles, in order to have a clear strategy, rather than leaving it to junior positions or local management. Pricing strategies are complex enough to have clear experts in charge.
  • Price upon added value, not based on production costs: customers purchase one product for the value it will carry out, not for how much it costed to produce. Therefore, you may under charge as an effort to stick to real operational costs, which is not efficient.
  • Unbundle prices: As airlines do by charging seperately insurance, luggages, aircraft seats..., you may unbundle your products, to make it cheaper for your customers price perception, or compared to your competition. Rather than selling a product with warranty, battery included, etc.. By the raw product with extra extensions. You may even be able to charge more in the end.
  • And most importantly STICK TO YOUR PRICE STRATEGY. I know new tools allow you to change your prices in a glance, depending on your competition, your financial results or the change in top managements, but a consistent strategy will be the best way to generate results. For customers to understand your pricing strategy it will require time, especially for him to trust in your prices. Don't change it over night. And evaluate on long term the results.