Worried about pricing?
We can all fret over pricing. It’s hard to be certain we’ve got it right. And can be costly if we’re getting it wrong. Too low and we leave money on the table. Too high and no sale at all.
But with research and a process, you can be sure to hit the right price.
Try these steps:
1: Ensure your thinking is balanced between internal and external focus. Do you favour looking internally, setting prices based on production costs. Or concentrate on competitor pricing and quotes won and lost. Neither is right, both are needed. Raise your self-awareness to maintain balance.
2: What level of scrutiny do you really face? How certain are customers when they compare? If you had a price promise could customers claim? The more commoditised the product the easier to compare. Added value services and unique designs the converse.
3: Find out what are your competitors doing? You can find out what your customers know. Plus you can use it to benchmark your pricing. Establish some check points to test your pricing.
4: Pull together all your own customer experience. Make a database of all the quotes you have done and the variants created. Price will not be the only factor, so you need to treat the data as ‘fuzzy’, but it is valuable none the less. Scale in data matters. Literally the more the better.
5: Establish a floor price below which you will not go. Sounds easy? It can be hard to optimise (and the subject of another post).
6: Consider your unique value. How much more (or less) than your competitors should you charge. Or should you try to match?
7: Pull together as your pricing strategy. Set the pricing floor at the minimum you must achieve. And the pricing ceiling at the level at which you quote and never win. Fill in the gap with the rest of your data. Overlay your unique value to go high or low in the range.
Uncertain? Do this first
If you can do all of these things, terrific. Hope to see you again soon. If not, then the start point I suggest is collecting more data about your own quotes. Do as many quotes as you can. Quote as many variants as you can. Collect and record every single one. This is the easiest and cheapest source of high-quality data for pricing.
Follow these steps and you on your way to pricing certainty. Good luck!