Almost every company deals with product pricing every day. However, some firms have realized that improving the way they price their products can boost profits substantially. Many large firms, even those with sophisticated marketing programs, still rely on simplistic cost plus pricing models that leave lots of money on the table.
Product pricing often appears to be the simplest pricing exercise possible. Setting prices based on costs and institutional knowledge about the market is quick and simple. This traditional approach requires no external data, little research, and can be accomplished quickly.
The problem is that the only way to discover the optimal price for your products is to understand your customers’ preferences and their willingness to pay. It is surprising how often companies do not even consider asking their customers what the price should be, since they assume that customers will always answer “as low as possible”.
Let your customers tell you what the price should be.
PriceGain has developed a number of effective methods for capturing the customers’ view on what the right price is for a product. We always find that different identifiable groups of customers have different views on pricing. Therefore, differentiation and segmentation are vital to successful product pricing. There are many ways to appeal to the different customer segments at different price points; you can develop new product versions, bundle products to add value, or provide services in addition to the core product.
Understand which of your products are most price sensitive.
We have seen time after time that customers usually focus much more on the price of some products and a lot less or perhaps not at all on others. You can improve profits by making sure that your most price sensitive products are priced as closely as possible to the perceived value delivered. You can easily sell other products at much higher margins alongside your price sensitive items.
Use PriceGain’s expertise to develop a more profitable approach to product pricing.
PriceGain helps companies develop effective new pricing strategies for their products. PriceGain will help you move away from cost-plus towards a structured and profitable price differentiation and further towards value based pricing where the price is directly a function of the perceived customer value. PriceGain will help you optimize your profitability while defending or even increasing your market share. PriceGain will also help retrain your salespeople to close more profitable deals using your new pricing strategy.
These are some examples of product categories in which PriceGain's expertise have helped companies improve profits:
