While touring diverse manufacturer Parker’s 225 facilities in 2001, CEO Donald Washkewicz had an epiphany: Parker had to stop their simplistic pricing strategy and optimize prices by what a customer is willing to pay rather than what a product costs to make. The results? Between 2001 and 2006 that revenues increased from $6.15b to $9b, while profits rose from $130m to $673m.
But price optimization is not only for manufactures like Parker. Optimized pricing strategy has transformed the business of companies in nearly every industry, from software to manufacturing to business services. When companies make the effort to develop sound pricing strategies their sales, profits and valuation all improve. In order to do so, companies need to start with a careful, anonymous examination of the value drivers and willingness to pay in the marketplace and how the company stacks up against competition. Based on those insights a pricing strategy can be developed that is optimized to capture the maximum of the markets willingness to buy and to pay. Also from this insight, messages, services, bundles, options, unbundles, content and sales processes can, and should be developed to leverage the company’s strengths, remedy the weaknesses, and above all, drive better price performance.
Sin embargo, la optimización de precios no es sólo para los fabricantes como Parker. Las estrategias de optimización de precios han transformado los negocios de las empresas en casi todos los sectores, desde el software de manufactura a los proveedores de servicios empresariales. Cuando las empresas hacen el esfuerzo por desarrollar estrategias sólidas de fijación de precios, sus ventas, sus utilidades y la valoración de la compañía mejoran. Para hacerlo apropiadamente, las empresas deben comenzar con un examen detallado y anónimo de tres factores:
- los valores que incentivan a los clientes;
- la disponibilidad de pago en el mercado y
- cual es la posición de la compañía frente a la competencia.
Con base en estos factores se puede desarrollar una estrategia de precios optimizada para captar el máximo de la disposición de los mercados a comprar y pagar. También con base en estos factores se pueden y deben desarrollar y construir, los procesos de ventas, servicios, comunicación, “combos”, paquetes, opciones, productos no empaquetados y contenidos, para aprovechar las fortalezas de la compañía, subsanar las deficiencias y, sobre todo, impulsar un mejor desempeño de los precios.
4 Responses to “Pricing Strategy”
“optimize prices by what a customer is willing to pay rather than what a product costs to make” This should be obvious but a lot of people thinks that price is determined by cost. It is not. If anything price determines cost, as costs above price can’t last. Marginal producers who can’t keep cost of production below the price will fail, and marginal production will be added with thinner and thinner profit margins. But low cost producers will have comparatively large profit margins.