Wednesday, January 20, 2010


Developing a pricing strategy perplexes many CEOs, marketing and sales executives, and brand managers. It's not surprising really: real businesses don't always follow the pricing strategy models that business schools and books on pricing strategy present. But there are a few basic guidelines that can help take some of the mystery out of the process of establishing a successful pricing strategy.

We consider that there are four basic components to a successful pricing strategy:

  1. Costs. Focus on your current and future, not historical, costs to determine the cost basis for your pricing strategy .

  2. Price Sensitivity. The price sensitivities of buyers shift based on a number of factors and your pricing strategy must shift with them.

  3. Competition. Pay attention to them, but don't copy them . . . when it comes to pricing strategy they may have no idea what they're doing.

  4. Product Lifecycle. How you price, and what value you provide for that price, will change as you move through the product lifecycle