Pricing Strategy as a Sales Tool

“…And basically the single most important decision in evaluating a business is pricing power.  You’ve got the power to raise prices without losing business to a competitor, and you’ve got a very good business….” – Warren Buffet, June 2011

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.

Client Testimonials

“The Atenga project gave us a clear direction for our global pricing
strategy and it provided us with the hard data we needed to bundle our new
products along the lines of customers’ purchase preferences and willingness to pay”
Alison Copus, VP Marketing, Trip Advisor, Business Listings

“We received price increases from our OEM suppliers and needed to pass them along.  We are in a highly competitive industry, and, in this economic climate, we were concerned that a price increase would seriously affect our business. Our objective was to resolve our internal margin issue, mitigate any negative pushback from our accounts and keep from losing market share. Thankfully, Atenga came to the rescue. They helped us with real-world advice on optimum price levels and how to properly go about implementing the price increases. They taught us all of the strategic and tactical ways to deal with this super-sensitive issue. And, they instilled in us the confidence to raise prices. Because of Atenga, I am happy to say that not only did we cover the cost increases from our OEM suppliers, in addition, our GP is up three points.”
Keith Marshall, President, Proficient Audio

“Not only was Atenga able to answer our most pressing pricing questions, but they also helped us strategically focus as a University on what was most important for the long term fiscal health of our school.  I highly recommend using Atenga to anyone serious about price optimization.”
Joel Recznik, Vice President of Enrollment