8 Questions to Ask
Do you reap the benefits of optimized prices and a properly segmented market? Here are 8 questions you should ask to find out. Do you set prices with last minute pricing meetings? And what data is used? Do you segment the market based on decision behavior and willingness-to-pay? Or on something irrelevant to your buyers?
Read moreThe Role of Research
3rd party anonymous research is paramount to the success of any price optimization project. The reason is simple. When customers talk to a seller, they lie. All for the purpose of getting a better deal. But with research, companies can understand in detail the true decision landscape and willingness to pay of the market.
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Pricing Strategy as a Sales Tool
Companies with an explicit, well-defined price strategy are twice as profitable as those without one. Their valuations are up to five times greater than companies without a well-defined strategy for pricing their products and services. Companies with a focus on pricing strategies will make sales more easily and win higher margins than companies focused on other business metrics.
McKinsey did a study showing that for the average Fortune 500 Company, every 1% improvement in price performance drove 11.5% improvement in profitability. AT Kearney did the same study 2 years later on the 2000 largest companies in the United States and found the same results.
Price strategies based on any metric besides the value perception of the buyers drive margins down, reduce sales velocity and increase commoditization. Prices based on buyers’ value perceptions deliver the products and services they want for the prices they are willing to pay. A sound pricing strategy is the foundation for a benevolent cycle of sales, fulfillment and delighted customers.
