cloud network hunting note: product positioning, the amount of profit, all this can be directly on price, a seemingly ordinary price behind also contains the wisdom of you I don’t understand. But hard to avoid mistakes in the process of pricing, how to realize the profit maximization should pay attention to what place? Hunting cloud network compiled in this paper, for you to interpret the ten common mistakes during the process of pricing.
pricing strategy is the enterprise to improve its competitive advantage and the critical path of the bottom line. Many enterprises take years by cutting costs , outsourcing , process restructuring, as well as the technical innovation and so on ways to increase income. Through these measures, however, the gains in reducing year by year, in this way, requires enterprises to increase earnings by other means.
today, companies are trying to use custom products , information, as well as derivatives to please have clear market segmentation, to gain high profits. Many companies, however, is only used a simple pricing process, not even sure their profitable customer or the customer classification. Listed below is many enterprises will be on its own products and services of the top ten common mistakes made by pricing.
error 1: pricing is based on cost, rather than the customer’s values
pricing simply refer to the cost of production may lead to the following two results: 1) if the price is higher than that of customer values (subjective) product value, cost of sales will increase, discounts also needs to increase, sales cycle will be extended, eventually lead to profit; 2) if the price is lower than the customer values, indeed it will sell goods, but as a result, the enterprise may not be able to maximize profits.
error 2: pricing is based on the “market”
with the “market price”, the enterprise will be their goods and services to achieve the goal of the commercial. Using market pricing is those failing businesses would choose method, finally make a profit with this method is extremely low. Compared with bankruptcies, management team have to find ways to achieve product and service differentiation, as a certain market partition to create additional value.
error 3: different product lines, unified profit space
some economic policy implementation means invariable, some enterprises want to try the same profits to achieve different product line. And prices law indicates that different customers have different positioning for the same products. For a lot of a single product, when the product price can reflect each customer purchase intention, it’s profits will be the highest at this time. This intention reflects their value proposition for a product, and the profit space with other product line here is completely different.
error 4: not divided to the customer (or error to distinguish)
the customer can according to different requirements for the product. The price of any product or service positioning in different market partition is also different, and different pricing strategy will need to reflect this. Implementation strategy should include the price of your product workmanship, packaging, transport mode, the choice of market demand and price structure of the partition according to different customers, this is in order to be able to get to the added value of these partitions created.
error 5: long time fixed price
fluctuations in price of most companies are afraid of change, so the price as much as possible to keep at a stable level. Smart companies will allow customers to adapt to their sales problems brought about by the price change frequently. In a short period of time, the market is likely to radically change. So for your goods position as the market changes and change becomes vital, and you must through the pricing change to reflect this change.
error 6: sales incentives directly affect the revenue
this is based on the sales incentive measures may lead to a loss of profits, because as a salesman in order to make up for the inadequacy of sales, may lower the price of commodities in the largest extent. This error caused by the price when seller has the right to decide the discount dynamics is particularly prominent. They will always put money on the table said: give you a lower price, then we have a deal.
7: wrong change price without forecast competitor reflect
pricing strategy could not exist out of thin air, must consider the competitors’ action. On price changes, not only need to consider expected competitors’ price change, also need to evaluate objectively the quality of goods and services.
error 8: use of limited resources for pricing test
in the enterprise liquidation profits: there are three basic variable cost, sales volume, average price. Most of the management team is good at cutting costs, but also confident to promote sales. But for the formulation of price, it is more like a black art. As a result, most companies will only using simple pricing process, the same type of enterprises, however, will use a more sophisticated technology, and the pricing process to implement for a minor change cost and real-time tracking control.
error 9: no internal processes to optimize price
hastily convened meeting “price” has become the norm – a last several minutes of meeting is a new product or service pricing. Participants are generally not ready, the survey is limited to a salesman’s anecdotes, or competitors last year’s price list, as well as the financial controller based on various assumptions goods cost structure.
error: 10 by a salesman or other client staff to get the price information
this kind of person is not stable resources, because they get information by the method has certain chanciness, thus they are information obtained may be purely anecdotal. The customer almost impossible for a salesman said that “the truth” 100%. Smart companies will hire people who trained professionals to collect and analyze data to identify and assess their market value.
pricing method is to provide higher profits directly to the enterprise, especially in North America, the role of pricing has not been effective. We believe as Stratinis Pricing Suite that better Pricing mastered the art and have effective analysis software company, to create a significant difference.