Fundamentals of Pricing Strategies and Tactics

A timeless article on pricing strategy that I wrote more than 20 years ago. Notice how pricing strategies have long shelf lives. Warmly, EM

The following five factors should be considered when establishing a pricing strategy:

Competition: Who is your competition? How many competitors do you have? The number of competitors you face can often be more important than who they are,especially when involved in a bidding process.

Customers: Should you differentiate pricing according to customer class instead of service or product? This practice is more and more common as most businesses have several classes of customers, some of which are price sensitive, while others are not.

Financials: What are your gross margins on products and services?

Perceived Value: Do your customers perceive a difference between your services and those of your competition? If so, are they willing to pay for the difference you offer?

Marketing Objectives: What are your primary and secondary objectives? Obviously, some of your objectives will conflict. It is your role to resolve these conflicts by determining and communicating primary and secondary objectives. You instinctively know which objectives are most important, but your people require constant direction to maintain their focus. In addition, quantify your objectives whenever possible.

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