Webinar Slides - The 6.99 Ways To Ensure An Effective Pricing Strategy - January 14, 2010

“The 6.99 Ways To Ensure An Effective Pricing Strategy” Webinar

Welcome everyone…

Agenda

• Background–What we have seen…– The importance of proper pricing

strategies– Pricing Strategies

• 6.99 Ways to Ensure An Effective Pricing Strategy

• Q&A• Wrap up

©2010 i2r Global Solutions Inc. All Rights Reserved www.ideas2revenue.com

What we have seen

• “Leaving money on the table”– Not including all costs (rent, utilities, etc.)– Not charging for true value of product or services

• Guessing Game– Decisions being made without market interaction– Not being able to justify pricing to customers

• Giving without Getting– Negotiating on price without adjusting delivery – Loosing loyalty. Set tone that prices are negotiable

• Adjusting too much or too often– Smaller increments are OK– More than twice per year is risky

• Treat pricing as a tactic rather than a strategy– Does not support company goals and strategies– Easiest aspect for competition to respond to


Importance of proper pricing…Wrong Pricing

Higher Cost of Sales

Lower Margins

Lower Profits

Sinking Business


Pricing Strategies• Skimming Pricing

– Set high prices, then lowering gradually to gain marketshare

• Competition Pricing– Setting prices by comparing with competitors

• Product Line Pricing– Multiple products/product lines. Higher prices for more features or higher “quality”

• Penetration Pricing– Set low prices to gain marketshare or revenues

• Psychological Pricing– Psychology and product placing. Example: $99 instead of $100

• Optional/Captive Pricing– Pricing product low, but focused on selling options to recoup costs

• Premium Pricing– Set high to create exclusivity. Example: Gucci, Porsche, Dom Perignon

• Bundle Pricing– Pricing a group of products to increase “perceived” value

• Value Based Pricing– Priced based upon the value that the customer receives from the product/service

FREE



The 6.99 Ways To Ensure An Effective Pricing Strategy

#1 Know Your Customer

• Get 100% clear on your target market, and the profile of your ideal customer

• Get out of the building! Get in front of your customers and prospects

- Understand where your product/service fits & how it’s being used- Understand their business- Understand their challenges- Understand how they make money©2010 i2r Global Solutions Inc. All Rights Reserved www.ideas2revenue.com

#1.99 Measureable Value

• Going beyond “How much would you pay?”

• Focus on the benefits, not the features• How is your product or service going to help

them to make more money?• How is your product or service going to help

them to save money?


Value is theirs to define!

• Focus should be on benefits, not features– Features are functionality or capabilities of

your product or service• Product – Pentium Processor• Services – Experienced team• Consultant – Microsoft Certified

– Benefits answer the question “what’s in it for me” for the customer• Product – Get your work done faster• Services – Quicker time to results (less expenditure)• Consultant – Quicker time to results (less

expensive)


Measurable Impact

• If it is not measured, it does not matter!– How is it measured?–What is the current measurement?–What would they like it to be?–What impact will this improvement have

on their business?–Why is this important? – So What?

So What


#2 Know Your Competition

• Know their price, but don’t compete that way

• Customers will always compare with industry leaders

• Strategic competitiveness– Packages– Offering– Credit Terms– Loyalty/Volume– Services


#3 Know Your Channels

• Pricing can make or break your channel strategy– Follow the flow of money– Know your industry, competitors, and

channel pricing well


- Make sure enough margins for your channel partners- Focus your margins on motivating your partner sales teams

#4 Know Your Business Conditions

• Supply & Demand• Seasonal factors or buying patterns• Exchange Rates


#5 Know Your True Costs

• Cost + $X or 3X Manufacturing costs should be limited only to commodity offerings

• Include overhead (Rent, Utilities, Taxes, Insurance, Exchange Rates, Sales, Marketing, etc.)

• Product– Get multiple quotes for all components

• Services– Make sure you include all sales, marketing, expenses

(cell phone, payroll taxes, etc.)• Consultant

– Include all operating costs– Include travel, entertainment, sales, marketing, etc.


#6 Adjust Strategically

• It is OK to adjust your prices! It just has to be justifiable– Use increased perceived value or packages to

increase prices

• Adjusting too much or too often will loose you customers– Better to do 2 times 5% than 10%


Summary

• Treat pricing as a strategy, not a tactic

• Ensure you know your target market, customers, channels, and competitors well

• Build/adjust your pricing based upon value…customer value

• Don’t be afraid to adjust…just do it properly


About Us


Specialized firm helping companies to be customer/market driven and using real-world clients, we help you to take the “guessing” out of your sales, marketing, and development strategies

Simply put…we bring your ideal customers and prospects to the table for you, and help you to build lasting, profitable, and collaborative relationships with your market through the integration of these key customers and their perspectives into the various aspects of your business.

[email protected]

Twitter: @ideas2revenue

http://www.ideas2revenue.com/

Questions?


Be sure to check out:

http://creately.com/blog/experience/how-much-to-charge-for-your-online-service/

Great blog post from Creately.com on a “pay what you want” experiment

Check back on Ideas2Revenue website (www.ideas2revenue.com/interviews.html)at end of the month, as we have a video interview scheduled with Creately.com CEOCharanjit Singh regarding this pricing experiment

http://creately.com/blog/experience/how-much-to-charge-for-your-online-service/

http://www.ideas2revenue.com/interviews.html