Various pricing strategies can be used to sell a product or service. The price can be set to maximize profitability, defend against new entrants entering a market, increase market share or to enter a new market.
However, setting prices can be a challenge. Set prices too high, and you miss out on valuable sales. Set them too low, and you miss out on valuable revenue.
Deciding how much to charge for your product or service requires more thought than simply calculating your costs and adding a mark-up.
We bring visibility to pricing and work with clients to understand the impacts of pricing decisons and how they impact their wider business objectives.
Examples of different pricing options we explore with clients include but are not limited to:
Cost-plus pricing— calculate your costs and add a mark-up
Competition based pricing—set a price based on what the competition charges. (This does not take into account the cost of your product or customer demand)
Price skimming— set a high price and lowering it gradually as the market evolves
Penetration pricing— set a low price to enter a competitive market (not sustainable in the long run)
Value-based pricing— setting a price based on what customers value most about your product e.g. functionality, materials, appearance. The key is being able to set a price for what customers value the most (Value Engineering) and produce it for as low cost as reasonably possible, (Design to Cost) to maximise profit.
Working with your teams we support the creation of pricing strategies for individual products or portfolios of products to achieve defined objectives whether its to defend market share or launch new products.