Pricing Strategies Webinar Recap

On Tuesday, IPC hosted another segment of its IPC Executive Webcast Series, “Pricing Strategies in an Uncertain Time: Quick-yet-powerful Methods to Optimize Price in Challenging Times.”

Let me summarize some of the insights from the program by listing some questions you should ask yourself about your pricing strategy.

1) Do you have an internal-focused or customer-focused approach to pricing?

Pricing involves three main influences (the three C’s):
-Customer perception
-Costs and margin

An internal-focused pricing approach means you prioritize the three C’s this way:
a) Costs and margin
b) Competitors
c) Customer perception

A customer-focused approach means you prioritize the three C’s this way:
a) Customer perception
b) Competitors
c) Costs and margin

Taking a customer-centric approach to pricing can keep you competitive because you’ll be meeting your customer needs.

2) What’s important to your firm’s continued success?

During the webinar, Tom Spitale and Mary Abbazia, presenters from Impact Planning Group, LLC, presented a case study of a shipping company and its approach to pricing. In the case study, the shipping company addressed the following as crucial to its continued success:

-Improving efficiency
-Retaining employees
-Growing more strategically

By acknowledging what’s key to your company’s bottom line, you can analyze what it will take to get you there. (See the next question).

3) What are the critical capabilities your company needs to deliver to your customers?

Translation: What do your customers need and want from you? To deliver improved efficiency to its customers, the shipping company identified that it needed to provide technology integration and flexible delivery.

Once you identify what your company needs to do to continue being successful (once you identify the critical capabilities your company should have), weigh the capabilities according to what’s important to the customer. How well do you deliver those capabilities to your customers today? What could you improve?

4) How do your customers perceive the value you provide?

The way your customer perceives the value of the products and services you provide is a HUGE factor in your pricing strategy. Bottom line: If the customer thinks the value is low, then you’ll have to provide that product or service for a low cost.

In challenging times, fair value gets distorted and it brings more pricing pressure, Mary and Tom say. Customers want more for the same price.

Once you understand and interpret how your customers perceive the value you provide, you can take steps to increase the value, therefore increasing your price points.

Mary identified several steps companies can take once they reach this point to build value and set the right pricing strategies.

-Align the price and the value of the product.
-Match the price with the value of the customer (to your business).
-Discover whether you can provide temporary pricing promotions.
a) Short-term incentives such as discounts or delayed payments; OR
b) Taking value off of the table (What are you giving customers that
they may not be giving in return?)
-Ask for something in return (A two-year contract instead of a one-
year contract, etc.)

The next webcast in the IPC Executive Webcast Series is on the state of the economy and its future outlook with Bob Shrouds, chief economist for DuPont. It’s on May 19 at 1 p.m. CT.

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