Last week, we looked at how preparing a pricing battle plan increases your sales and profits while decreasing your stress. This week, let’s look at another example, a service business with about 10 professionals. To protect the guilty, we’ll call it Smiley Services, which helped companies with various process and legal issues. Service companies often [...]
How many businesses build a cool product, then figure out what to charge for it? How many companies decide what to quote on a proposal after they’ve written the proposal? If you make your pricing decisions then, you are at your most emotional and least rational point, and likely to mis-price (usually underprice) your offering. [...]
Creative people love making things– widgets, software, knowledge, service calls. A lot of businesses and product lines get started this way. Someone has a cool idea to make something. Skeptics shoot down the idea. The founder or engineer makes it. Eureka! Triumph! Now, how to price it? At this point, you’ve done the hard work. [...]
Twitter is abuzz with the anguished cries of Netflix customers, many of whom will soon be paying $16 per month instead of $10 per month for movie rentals. Many others have angrily threatened to cancel their subscriptions. Instead of focusing on that, though, let’s look at how Netflix could raise prices by 60% (for some [...]
A lot of businesses think they have a great product or service. Something above and beyond what the competition offers. But when it comes time to put a price on all this awesomeness, they are still cheaper than the competition. This is a particular problem for small, service-oriented businesses that try to compete with larger [...]
I get a lot of questions about price optimization, so I just wanted to make it really simple. Write down your costs. Of course, you won’t know your real costs, so just use estimates, preferably from 2-5 years ago. These costs won’t include much nuance about fixed overhead, variable costs, service costs, customer acquisition, or [...]
How do you know when to stop asking questions about value? Couldn’t this go forever, asking “Why? Why? Why?” until we end up in a philosophical discussion? You want to ask questions until you no longer get meaningfully different answers. At this point, you know what you need to know. For example, suppose you want [...]
In a previous post, called Be Better, Not Cheaper , I talked about how important it is to differentiate elements of your offering other than just your price. Here’s a great example of executing that strategy from Austin and San Antonio-based Red Velvet Events. The big value drivers for her clients are increasing sales results [...]
Your price ceiling is limited by the Perceived Differential Value of your offering. Customers determine this, but you can help them along the way. Your price floor is limited by your costs. If your floor and ceiling are the same height, you are going to get squished. Never limit yourself on price. This is the [...]
If you’re reading this blog, you probably know the dramatic profit impact of small price improvements. (For a company running at 10% net margin, a 1% price improvement increases profit by 10%.) Yet even when companies want to improve pricing performance, they often feel like they are at the mercy of the market. If you’re [...]
