By: Rick Kavenagh, Director of Entrepreneurial Services
With the downturn in the economy over the past few years, we have all looked at ways to cut costs. I think it’s safe to say that most, if not all of us, are running “mean and lean” these days: constantly looking for new customers while running our business as efficiently as ever. But what about our sales to existing customers? Are we sure we are charging the right price to cover the specific needs of each customer?
Recently, I and some others here at BCG&Co. had the opportunity to talk with Ralph Zuponcic and Larry Robinson, PhD of PricePoint Partners. We discussed the cost-plus approach to pricing, and found it is hit-or-miss. You are either right on, too high or too low. Strategic pricing involves apply analytics to the current pricing structure to identify areas of pricing opportunity. These analytics take three fundamental value drivers into consideration: product price sensitivity, market price sensitivity and customer price sensitivity. The answer isn’t always increasing pricing—there are often situations where discounting would yield a higher return.
Below is a link to the Industry Week website article with more information about strategic pricing to boost manufacturers’ profits and company value, and an interview with Ralph and Larry. If any of our blog followers would like an introduction to Ralph and his team at PricePoint, we will be happy to make the introduction.
Are You Getting Your Pricing Right or Leaving Money on the Table?
