Pricing Altitude

DO

• Price for profit, innovate for growth.
• Diversify your offerings into high vs. low value. Innovate both up (high-value, high profit features and services) and down (stripped down versions that will protect you against low-cost competitors) to protect your brand.
• Whenever possible, quantify the value to the customer in dollars and cents, then capture it in your price.
• Understand the pitfalls of cost-plus (variable vs. fixed costs).
• Back up your marketing materials with the financial characterization of value.

DON’T

• Panic (especially in times of economic downturn).
• Start or respond to a price war. Learn to compete peacefully.
• Try to increase sales volume in inelastic markets by using the pricing lever.
• Feed the beast – create continual expectations of lowering prices by perpetuating price concessions without value tradeoffs.
• Let your customers dictate your price. The customer is “almost” always right; pricing is an exception.