Pragmatic Pricing #2
from Pragmatic Pricing.com 7/13 enhanced by Peter/CXO Wiz4biz 8/13
Pricing is the most Powerful Lever continued
Action: How much revenue does your business take in? How much profit is generated by that revenue? What if you could increase your revenue by 5% without increasing your costs? How much additional profit does that generate for you? Is it worth working at this?
The Magic Price is like Santa Clause
Many people I talk with have this belief (maybe it’s just a hope), but a belief that if only they had the right price, they would be doing so much better than they are now. This belief in a “magic price” makes us feel good, just like Santa Claus makes us feel good. However, neither are true. Beamer, no, Bummer yes !!!
You Create Value, Price Only Captures It.
You create value with your products, your services & your marketing. There isn’t a price that will magically create so much value that customers will flock to your product. In a few circumstances, price can add a little bit to your “perceived” value, but not a Santa Claus effect. A magic price just doesn’t exist. Sorry. So why should you care about pricing? Because it is amazingly profitable, a small improvement in pricing can produce a large increase in profit.
Action: Admit to yourself that you hoped there was a magic price that would make you more successful. Now repeat after me: “There is no Santa Claus, and there is no magic price.” It’s almost time to roll up your sleeves and do some real work on pricing.
You create Value. Price only measures it.
The value of a product or service is measured by how much your customers are willing to pay for it. The price you charge is your best estimate of your customers’ willingness to pay. In its simplest form, your potential customers compare your product’s benefits with your competitor’s product and your price with your competitor’s price. If they decide to buy a product in this category, they will buy the one that they think is the best deal for them. (The term product in this context means products, services, and all of the pieces of the offering like warranty, support, delivery, etc.)
[ How much can you Charge? Added Value, Perceived Value + Action to take – in Premium Content