Maintaining profitable pricing is often one of the biggest challenges for
companies in transition. And yet, raising
prices can be one of the most direct ways to improve your bottom-line
performance - assuming you don't lose profitable customers doing it. How is
that possible?
Pricing is a continuum not a series of fixed points: every customer has a
range of prices which they are willing to pay for a given product or service.
The upper end of the range is bounded by the highest price the customer will
pay and the lower end by the lowest price the vendor / supplier will accept.
For you as the supplier (and ignoring competitors for the moment), success
involves clearly identifying those boundaries and then working smartly to
position your price to the customer at the highest possible point in the range
without going over the customer's upper threshold.
How can you do that?
- Spend some time thinking about pricing
issues in your business. Is sub-optimal pricing a function of poor
competitive data, poor sales discipline, poor product positioning, other
factors or some combination?
- Analyze your pricing versus that of your
key competitors taking into consideration the business benefits received by
your customers versus the customers of your competitors.
- Look for creative ways to re-position your
product or service at a higher value, and therefore at a higher price. In
some cases, simply raising a product’s price can improve sales by raising
customers’ perception of the product’s value.
- Develop and implement a conscious plan to
manage your company’s pricing practices based on market facts and objective
analyses.
A useful resource for pricing ideas is 46 Ways to Raise Prices . . . without
losing sales! by Marlene Jensen. The ideas are straightforward and
practical.