Improving Your Pricing Strategy and Execution
Is a discount absolutely necessary to get the business?
Does your company discount when a customer is already going to buy?
Has fear-based discounting impacted your company’s profit?
Are salespeople more price sensitive than customers?
These are just four of many questions discussed at our EDGE Pricing Strategy session with Doug Butdorf – Boost Profits, who shared many strategic concepts that impact raising prices as well as holding the pricing you have determined with Northeast Ohio business leaders.
Key Discussion Points:
- Have you created customer entitlements?
- Should you show a “rush fee” that could be waived as one way to manage customer entitlements?
- Everyone wants everything cheaper
- Are some customers members of the “can’t hurt to ask” club?
- When a customer requests a price match, is it really a “love letter”?
- Ask: What is it about us that causes you to want to do business with us?
- What is in your product/service that is “free” to the customer? Should you charge for it, or at least take it away when discounting to show the value?
- Consider options you can trade for a discount.
- How are you solving the customer’s real problems?
- Price sensitivity example: Think about whether you are selling hot sauce (customers don’t know the price, don’t care much, probably aren’t price sensitive) or gasoline (everyone knows exactly what gas costs and are highly price sensitive).
- Price considerations
- Should your price be reassuringly expensive since sometimes a price tag is a proxy for quality?
- Build an FAQ that will help your salespeople overcome price objections
- Create a pricing strategy
- Develop a cadence for evaluating pricing (example: monthly or quarterly)
- Build visibility into strategy execution
- With cost increases going on, consider:
- Cost sets the floor
- Value sets the ceiling
- Create a pictorial of your superiority
- Avoid unearned discounts because they undermine trust.
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