Pricing. Easy enough right? Price your product or service at a level where you stand to make a profit once you've taken total costs away from total revenues. Simple as it may seem, pricing is such a crucial factor in determining a company's viability. If you price too low, then you will leave money on the table that could have contributed to the growth of your company. If you price too high, then you stand to lose existing and potential customers as they settle for a suitable substitute.
The following article "Why Everyone Lies About Pricing" is an interesting article related to pricing. It speaks from personal experience, articulating lessons learned from poor pricing management. The key takeaway from this article: in order to really understand pricing, one needs to understand both the inside and outside realities of pricing. The inside reality of pricing is your typical cost structure, its variation, and the long-term implications. The outside reality of pricing is your customer's valuation of your product or service and their willingness to pay for it. However, the difficulty with the outside reality is that not everyone will be honest. The only truth we really know: customers will want to pay as little as possible.
What are your pricing strategies? How do you really understand your customer's willingness to pay?
Link: http://www.inc.com/rory-odriscoll/why-everyone-lies-about-pricing.html
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