Why Pricing Is So Hard and Why Most Companies Mess It Up
Rule 1: Replace the Discounting Habit with a Little Arrogance
We often to refer to discounting as the "crack cocaine" of many executives today. Discounting can be a terrible habit and one that is difficult to break. The result is not only lost revenue and profits today, but the impact is often felt long into the future. The best way to break any habit is to replace it with another. In this case, replace discounting with a little arrogance. This arrogance is just what is needed to kick the discounting habit.
Rule 2: Understand the Value You Offer to Your Customer
You can't have confidence in your pricing until you have confidence in the financial value that your offerings have on your customers'
Rule 3: Apply One of Three Simple Pricing Strategies
Bring up "pricing strategy" in a meeting and you are likely to get a number of different answers and opinions. The most common answer being, "We need our strategy to stay flexible in our dynamic markets."
If you don't have a well-defined pricing strategy, then who, specifically, is setting your prices? Customers? Competitors?
The key to stop leaving money on the table is to take control of your pricing, and own your strategy.
Rule 4: Play Better Poker with Customers
If you really want to stop leaving money on the table and curb senseless discounting, invest in learning how to play better poker with customers. Some customers are motivated by price alone. Others want and are willing to pay for value.
Rule 5: Price to Increase Profits
OK, show of hands, and be honest now...how many of you believe that if you grow the top line by increasing sales, you will see increased profits? Seems reasonable right?
Well, it's a myth.
And Erin is going to bust it.
Watch Erin's video to understand why profits result when an organization does many things right, including pricing. Efficiency, controlling costs, better profit metrics - all are required for pricing...and profit...success.
Rule 6: Strengthen Negotiations with New Products and Services
Too often, sales teams only use discounts or service
In this video blog, Peter Morelli takes a look at how adding new products and services give sales teams the negotiating flexibility they need to defend value and price. The most effective product strategies create a solution that covers high- and low-end customer needs.
Rule 7: Force Your Competitor to React to Your Pricing
Avoid the competitive pricing death spiral. Smart players in the market know their value to customers, they know where they are strong and where they are weak. Knowing this value advantage makes for better, more profitable outcomes in competitive situations.
Join Alison Yama as she explains the key to
Rule 8: Build Your Selling Backbone
Confidence in negotiation requires confidence in pricing. Confidence in pricing comes from knowing the value of your products and services to your customer. Importantly, confidence also grows the more you understand your customer's business.
Backbone is different from confidence. Backbone comes from knowing the tricks your customers use to get you to drop
Rule 9: Move from Cost-Plus to Value-Based Pricing
The goal with value-based pricing is to take an outside-in view starting with the customer and their market. I hope you've learned through this series that value-based pricing is bigger than "just pricing." This outside-in view will help you craft your value strategies in the products you create (Rule Six
Value-Based pricing is an end goal and not all companies can or should implement it. But those companies that do often see a return higher than those who don't. It also takes time to get there. Over the long-run, you will build that confidence in the value you create for customers and the prices you charge.
Rule 10: Price with Confidence: Remember Who You Are
Reed Holden finishes our celebration series with Rule 10, Price with Confidence: Remember Who You Are
In this video, Reed explains the most important lesson learned over the last 10 years & tells the story of Michael, President of a company, that found his confidence and made his company millions in profit.
In addition to this video, Reed was recently interviewed about what's changed since he wrote the book and what Executives need to do differently in the future in order to drive pricing with confidence. It's a don't miss interview!