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The 5 Top Reasons To Price Better

Posted by PriceBeam on September 13, 2016

If you are like me, while we have survived the great recession, and business is now booming, we know there will be another recession sooner or later. I'm thinking then; how will it affect my business? How will it affect me personally? But I’m also thinking “how can I use the current situation to my advantage? How can I grow my business and be well prepared from when then next recession hit?”

Well, in fact, pricing right you can use now to gain the upper hand in your business. Here is why:

  • Leverage: According to consulting firm McKinsey and Co, pricing have a greater impact on your company’s profitability than any other strategy; among the S&P 500, it three times higher than cost cutting; twice as much as sales volume increases. Do the calculation for your firm. I call this the 1% challenge. Find out the financial impact of a 1% reduction in cost, 1% increase in sales volume and 1% increase in price? You will find that pricing has the highest lever on profits.

  • Competitive advantage: Only a few percent of companies has implemented and executed a pricing strategy based on an in-depths understanding of its customer's willingness to pay. Those who do generate twice the profits compared to peer companies.

  • Long-term growth: Companies with best practice pricing strategy growth at approximately twice the rate of businesses with simple pricing practice. As your competitors falter, your firm should use pricing strategy come out on top!

  • Speed: To price right, to measure what you customers are willing to pay for your product or service and implement the right price is a matter of weeks.

  • Now is the time: There is never a better time to stop leaving money on the table; every day you don't price right, you do! 

I hope these short bullets give you some food for thought. Pricing right will help your business tremendously.

Written by PriceBeam

PriceBeam
PriceBeam posts regular guides, articles and news related to pricing and strategy. Go have a look!