People believe setting prices is a “black art” in business. Yet your ability to effectively set prices has a deep impact on the success and profitability of your business. There are 2 very simple activities you can complete to get a better grip on your pricing. Let me draw those 2 activities and some very simple exercises you can complete to begin pricing more effectively.
What is "effective" pricing?
Effective pricing achieves a number of outcomes for your business. It:
- Maximizes your profitability
- Focuses clients on the outcome and value delivered
- Enables you to have healthy cash flow
- Builds competitive differentiation
- Delivers your business strategy
- Improving your pricing strategy isn't just about putting your prices up. You need to think widely about the implications for your business.
The facts about pricing strategy:
- There are a number of different ways to go about setting prices
- Each method has its strengths and weaknesses
- The key to setting prices effectively is to learn what you can from each method and use that knowledge to identify an optimum price
- Whichever method you go with there will be a degree of experimentation before you discover the optimum price.
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