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With Jan Triplett, Ph.D.CEO, Business Success Center
© 2011 Austin, TX
Best Practices in Pricing
© Business Success Center, Austin, TX 20111
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Your Passion, BSC’s Expertise
• Our Mission: to help you find your way
• Providing guided growth to achieve success since 1982
• Sales, marketing, & financial management focus
• Clients from A-Z industries, high tech to no tech, products &services
© Business Success Center, Austin, TX 20112
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© Business Success Center, Austin, TX 20103
Poll #1 Please tell me about you.1. Are you an
1. Owner2. Manager3. Employee
2. Size of business1. Less than 20 employees2. 20-99 employees3. 100-499
4. 500+3. What do you sell?
1. Primarily services2. Primarily products3. Products & Services
4. How old is the business?1. Not open2. Less than 5 years old3. More than 5 years old
5. Yearly revenue (average)1. Less than 500K2. 500K- Million3. Over a million
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© Business Success Center, Austin, TX 20104
Poll #2 Your Biggest Concern about Pricing
Please indicate which ONE of the following is your biggest concern about your pricing.(Pick the one that keeps you up at night.)
1. Losing too many customers2. Not being competitively priced.
3. Leaving money on the table.4. Not being profitable enough on each sale.5. Afraid I am not accounting for all my costs (missing something).6. Afraid to adjust my price.7. Competitors under pricing me.8. Breaking the law with my pricing policies.9. None of the above.
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Your Company Focus?
B to B?
B to C?
Better to be P to P
.)(.(Belly Button to Belly Button)
© Business Success Center, Austin, TX 20115
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© Business Success Center, Austin, TX 20106
POLL 3
Who is your primary customer?1. Another business2. A consumer
3. A non profit business/association4. Business and consumer5. Government
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Who’s your customer now?
Who’s your prospect now?
Platinum Gold Silver
Bronze Lead Concrete/Radio Active Waste
Platinum & Gold — create stabilitySilver — has potentialBronze — uncertainLead — a time wasterConcrete — a business killer & never satisfiedRadio Active Waste a long-lasting reputation &confidence destroyer
© Business Success Center, Austin, TX 20117
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Platinum customers are…
• Visionaries
See problem as you do
See value of your solution
• Adventurous
Confident in you
Trust you• Decisive
Hassle-free or less hassle
© Business Success Center, Austin, TX 20118
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What’s Your Desired Pricing Goal?
Attract paying customers who are:• Most Lucrative
• Easiest Sale
© Business Success Center, Austin, TX 20119
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© Business Success Center, Austin, TX 201010
Poll 4
1. What customers do you currently focus on?1. Most lucrative (bring in most money over time)2. Easiest sale (most accessible)
2. What customers do you want to focus on?1. Most lucrative (bring in most money over time)2. Easiest sale (most accessible)
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A “Fair” Price
Customers want: To get good value, pay a
fair price.
Sellers want: To give good value, get a fairprice.
Dilemma: What’s fair to one; may not
be fair to the other.
© Business Success Center, Austin, TX 201111
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What Do You Want Customers To Do?
Examples:• Try it
• Stock up
• Repeat buy
• What else?
© Business Success Center, Austin, TX 201112
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What Do Your Customers Want?
• More than a solution or something fixed. — There are 6 outcomes they value
— There are 5 personal risks they are willingto take to get what they value.
© Business Success Center, Austin, TX 201013
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Pricing Considerations
© Business Success Center, Austin, TX 201114
Pricing is an emotionalissue for you, youremployees, & customers.
Buyer reaction to price isunpredictable.
Shoot from the hip & you’llend up shot in the foot orworse.
One price strategy usuallydoesn’t fit all products/services.
Controlling costs can makea business more profitablethan raising the price.
Stay alert: pricing laws ®ulations change.
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A Quick Word About Laws
© Business Success Center, Austin, TX 201015
Two key laws to be familiar with:
1. DTPA (Deceptive Trade Practices Act) — illegal to “bait &
switch” or any of the many other ways that are used tomislead customers. Applicable to sales to businesses andconsumers.http://www.statutes.legis.state.tx.us/SOTWDocs/BC/htm/BC.17.htm
2. Clayton Act (Robinson-Patman Act Amendment) — illegalto discriminate on price (except in some instances), tie or bundle purchasing contracts.
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What You Need to Know about Pricing Pricing should be… Pricing will…
© Business Success Center, Austin, TX 201116
An attention getter and
qualifier. A way to position your
company.
Perceived by yourPlatinum-preferred clientas a benefit not just afeature.
Make you rich or at least
comfortable or just sickand tired.
Affect the success of allareas of the business.
Require that you don’t justset it & forget it.
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Your Price is NOT Right for Everyone
It’s all about:
1. Getting the right customer2. Keeping the right customer
3. Considering their perceived risk4. Knowing your true total costs5. Identifying the top value you bring6. Accounting for long & short term goals
THEN Pricing Right & legally!
© Business Success Center, Austin, TX 201117
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The Big Debate
Cost
Vs
Value
© Business Success Center, Austin, TX 201118
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© Business Success Center, Austin, TX 201019
Poll 5
What is your current pricing based on?1. Competitor’s pricing2. Your costs3. The value you provide your customer
Who makes the pricing decisions in your company?1. You2. Sales Manager3. Financial Officer4. Owner5. Other
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Best Practices in Pricing
• Price what you’re worth.
• Use KISS pricing system.
• Account for profit,contingency & hassle-factor.
• Price for positioning.• Monitor & adjust.
© Business Success Center, Austin, TX 201120
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Worst Practices in Pricing
• Undervaluing your benefits.
• Under-estimating costs.• Not considering your Platinumcustomer’s “Flinch Point”.• Blindly following competition.
• Inconsistent pricing.• Violating laws - DTPA
© Business Success Center, Austin, TX 201121
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Good & Bad Pricing Examples
1. Charging $15 per hr for professional services
2. Providing a $400 discount on a product
3. Charging $500 for one research report
4. Charging low price to get started
5. Your examples?
© Business Success Center, Austin, TX 201122
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Pricing Practices Action Items
1. Make sure you have accounted for your true total costs.
2. Know the value of what you sell.
3. Ensure your pricing reflects your preferred customers valueoutcome, your preferred positioning, meets legal requirements,includes profit and contingency as well as costs.
© Business Success Center, Austin, TX 201023
For a copy of BSC’s Pricing Terms & Concepts Glossary or additionalquestions, please email me at [email protected].
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Here’s to your
success! Jan Triplett
Jan Triplett
Blog: http://www.ownersview.com
Business Success CenterSales & Financial Management Services
© Business Success Center, Austin, TX 2011
February 10, 2011