Options for Small and Medium Companies
Pricing is the art and science of setting the value of products and services in the marketplace so that money is not left on the table yet does not turn the customer away. Optimized pricing can easily increase sales, in fact, a top US based drugstore chain increased their sales by $110 million a year using enhanced pricing strategies. Whether your business is long-standing or has survived the first few years, the best way to grow is by ensuring your pricing strategy maximizes sales and profit.
More Than Cost Plus Markup
Unfortunately, most businesses run a pricing strategy of cost plus markup. While this can work for some items, it won’t work as a strategy overall. In fact, it is one of the worst ways to run a profitable business. This ordinary way of pricing simply takes the cost of production and adds a desired profit margin, which generally leads to prices that are too low or too high and misses profit potential.
Most likely, different strategies will be needed at a variety of levels for a comprehensive pricing strategy. Here are the most common pricing strategies to consider:
With the current events of the world, potential difficult economic times, and supply chain fluctuations, pricing strategy is critical to maintaining your business while balancing the expectations of your customers. Along with your pricing strategy, be sure to consider the following aspects of day-to-day business:
Who Can Handle the Pricing
Unlike marketing, finance, supply chain, and IT, pricing is a relatively niche area. Many small and medium businesses cannot afford a full-time pricing expert, nor can management staff cover all the needs to properly price products and services. This is where third-party pricing professionals, such as Pricing Advisors, can make a world of difference. Specializing in world class pricing strategies, they are experts at executing pricing strategies for small and medium sized businesses.
How the Experts Price
When looking at the pricing strategy, it is critical that the value to the customer remains higher than your cost with a balance of quantity and understanding the established market. Then with an understanding of your business growth and strategic planning objections, pricing experts work to create the right pricing approach to increase market-share, sales numbers, and profit (or all three). Within the pricing strategy consideration is given to the break-even point, which assists in the pricing strategy to take necessary risks. The best pricing strategy can also help maintain your customer base during tough economic times.
With a focus on pricing strategy led by a pricing expert, small and medium sized companies can continue to grow and develop successfully. Pricing is one of the most powerful tools, especially in today’s economic environment. Whether your business needs a sounding board, or you need a full pricing strategy implemented, contact Pricing Advisors at (267) 551-0529 or email@example.com and start a discussion today.