The Importance Of Pricing

The Importance of Pricing

To be honest I love pricing.Do you know why - because pricing is the easiest way in the world to increase your profits.
But most people struggle with the concept of pricing, they often complicate the process and make it harder than it really
is. I suppose that's because it is not an exact science.

When I hold seminars and ask the audience if they believe their pricing is "right on the mark", I normally get less
than 20% of the audience raising their hand. That means 4 out of 5 or 80% of the audience isn't sure if they are pricing
their products and services correctly. Don't you think that is a frightening statistic?

When I ask audiences to rate the importance of pricing on their profitability where 1 is of little importance and 10 is
extremely important, they invariably give it a rating anywhere anywhere between 8 and 10. Many actually give it the top
score of 10.But when I ask them if they have a pricing strategy or a process for developing and reviewing their prices
they often say no in a rather sheepish way. In fact they often go on to say that they spend little time on their pricing

even though they agree it is crucial to their businesses profitability.

When we take on a new client the conversation invariably turns to pricing. After an initial assessment I will often suggest
they consider increasing their prices. More often than not they will give many excuses why they can't, such as I will lose
customers, or my prices are in line with my competitors, rather than reasons why they can increase prices.

At The FD Group we have developed a 10 point checklist to help business owners approach pricing in a more systematic way.
If you would like a free copy complete the enquiry form on the website. I would like to briefly cover 3 key points on the
checklist.

First, review your prices at least twice a year. This does not necessarily mean you will increase your pricing. Make sure
you set aside time for this exercise and include key people in this process.

Second, identify the key objections customers may have to your prices and prepare answers to overcome these objections.
Ultimately you have to be prepared to lose those customers who do not value your product or service enough to pay for it.

Thirdly, when pricing your service or product, take into account its perceived value. In other words if you know your product
is going to result in savings of £100k for a customer, price it accordingly. Don't price it as though it was a widget.

I am confident that if you approach pricing in a systematic way you will boost your profits but you must be confident in
your product or service.

Video Source: Youtube