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:
- Costs. Focus on your current and future, not historical, costs to determine the cost basis for your pricing strategy .
- Price Sensitivity. The price sensitivities of buyers shift based on a number of factors and your pricing strategy must shift with them.
- 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.
- Product Lifecycle. How you price, and what value you provide for that price, will change as you move through the product lifecycle
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