A pricing strategy is the method used to price your products and services so that your sales volume produces sufficient margin to cover your operating expenses, and generates sufficient profit to meet your business goals.
There are a variety of ways to approach pricing strategies, depending on a company’s goals. Prices may be set based on maximizing per unit profit, defending market share against new competition, or easing the way into a new market, just to name a few scenarios. It’s important to keep in mind that price is a significant element of your company’s image. Customers can make comparisons with a click, and price affects their overall perception of your product or service.
Do You Really Need a Pricing Strategy?
Considering the challenges and complexities of defining and managing a pricing strategy, is all the effort worth it? In a word, yes. If you don’t manage pricing, your sales team will – on a case by case basis – and the results could derail your journey to success. Among many benefits, a standardized pricing strategy will reduce margin leakage, and illuminate opportunities to maximize volume and negotiate procurement more competitively.