Communicating the price is an activity that requires a pricing strategy as the pricing strategy chosen is essential to how much profit a company gets. Pricing strategies are important in price communication because pricing strategies require customers to know about things such as buyer psychology. Businesses need to have some sort of guidance on how to communicate price to their clients and or customers on a frequent basis. Price tends to be communicated poorly because businesses understand customers' desire for clarity and certainty as a way of demanding a low price for a particular product or service. Here are seven tips for businesses so that they can improve their price communication methods.
We are excited to announce three upcoming webinars in June:
- June 5th: Pricing Right Made Easy - Optimizing prices with research: learn about how to use price research when setting prices, including using different research methods. See how segmentation along customers' willingness-to-pay can drive superior profits..
- June 12th: Value-Based Pricing foundation done right: Conjoint Analysis: Build a solid foundation for your value-based pricing strategy by implementing regular price research using conjoint analysis. Understand value-drivers and differences in willingness-to-pay.
- June 19th: Increasing prices more efficiently with research: price increases are sometimes difficult to implement. In this webinar we look at how you can become more efficient and achieve a higher proportion of the price increase potential through price research.
You can learn more about each by clicking on the links and signing up. Once the webinars are live you will receive an email with a personal link to watch the streaming video, at your time and convenience.
Pricing Managers, Marketing Managers, and Sales teams often find it more difficult to get pricing right when launching a product in a new market, as opposed to pricing the same product in an existing market. In theory existing-market pricing should go through the same steps as new-market pricing and look at value drivers and willingness-to-pay, but in many situations existing markets mean there is a reference point to base the price on. Such a reference point is lacking if pricing for a new market.
Here are 7 ways for getting the price right when launching in new markets.
Are your prices based on costs? Or a process of adding X% on last year's price? Or do you price based on what the nearest competitor is charging? Well, then of course you are in need of upgrading your overall pricing approach to value-based pricing, where prices are set based on the value you create. Often the value-based pricing strategy is supported by data and research about your customers willingness-to-pay. If you know what a customer is willing to pay, and what features she values, then value creation and value capture is much more accurate.
Launching a new product, whether you are in a startup or a well-established corporate environment, can be a daunting task. Everything from product development to marketing materials, sales training, customer communication and pricing comes in play. One of the biggest determinators of success is getting pricing right: price too low and the profitability is broken, plus it is almost impossible to later increase the price (substantially). Launch at too high a price and you may not sell enough to get off the ground.
Barriers to entry and the difficulty of doing business abroad have reduced considerably over the last two decades, thanks to technologies such as the Internet. This means it is much easier to do business around the globe but also that brand and product communication is increasingly global. Customers or consumers in Germany can now see product features, prices and discounts offered in USA or Singapore, and may create bad publicity if they feel that what they pay for locally is not of the same value. International prices are also considerably more transparent than ever before. On the other hand, both willingness-to-pay and actual prices do differ considerably around the globe, be it of similar of even identical products. What an Indian or Brazilian customer is willing to pay for Product A may not be the same. Or, a German customer may value Feature B over Feature A whereas the Canadian or Danish customer really only cares about Feature B and maybe Feature C that is not even available in Germany.
Launching new products or services can be a daunting task. With everything from product development, marketing, sales training, customer communication, as well setting the price. Price research can help in various ways with these challenges.
Communication is key in any comprehensive price management setup. Price and Value Communication is how you communicate with the customers, and communication and training is what makes the difference between convinced sales people, who deliver value conviction to the customers, and sales people who are indifferent and not able to defend the company's prices.
Fact: Most companies should increase their prices.
Increasing prices can be daunting, and is certainly not a fun thing to do. Customers will get angry, some will have feelings of betrayal, and there is lots of uncertainty and risk. Just how angry will your customers get? And to what extent will this anger translate into churn?
Consequently, price increases tend to be postponed or avoided, despite the obvious opportunity for a profit increase.
Chances are you are not like most companies, and therefore shouldn’t increase your prices. Doing preliminary pricing research is essential so that your price increase is an informed decision, and not just based on your intuition.