Spring is an ideal time to revisit old pricing practices, assess their efficacy and commit to refreshing what might not be helping the long-term interests of your business, including pricing policies and strategies.
Quick acceptance or rejection of a new product is most common for everyday consumer goods. Speed of adoption can have a significant impact on the pricing strategy surrounding a new product launch.
Good negotiation is a commendable talent, but businesses need the skills to deal with good negotiators. Protecting your profitability from good negotiators requires ardent compliance to pricing policies, a flexible pricing infrastructure and the ability to say “no”.
Far from being the first to take action, a true price leader is able to consistently execute pricing actions that result in a desired effect. Much like in a game of chess, a pricing leader devotes the time and resources to understanding the motivations and aspirations of its competitors and to building the skills necessary to think several pricing moves into the future.
We find that companies often treat bundling as purely a marketing tactic versus a component in a broader pricing strategy. It is not uncommon for companies to incorporate terms and features into a sale without understanding their inherent value.
On May 4th the Canadian government officially stopped production of the penny, and will now be using “Swedish Rounding”. There may be significant implications for pricing, after all a 1% improvement in price leads to a 12.5% improvement in corporate profitability for the average company.
Cost based pricing is relatively simple. The simplicity of cost-based pricing is what attracts many companies. But we think companies would benefit from slowing down before adopting such a pricing strategy.
If a consumer is shopping for an exclusive brand and likes the idea of buying smart, then many would conclude they can save some money by buying online from a country that sells it cheaper. However, the truth is that they probably won’t succeed; at least not online.
For the average business, a mere 1% increase in price leads to a whopping 12.5% improvement in profitability. That’s the single most powerful lever a company has for boosting the bottom line. The pricing waterfall, a tool for identifying hidden costs and expenses, is one of the most effective ways of capturing that 1% – or more!