Continuing the Pricing Is Not An Afterthought Pt. 1 discussion, let's follow up with three leading strategy suggestions to improve pricing results. Many companies fall victim to the pitfalls of new product pricing. Here are three practices proven to work for leading companies, that have utilized effective pricing strategies in business. 1. Build Price And Value Alignment Early Companies have maximum leverage to shape the long-term profitability of a product during the early stages of the development lifecycle, where cost to make changes is very low. There is also a freedom during early development stages that allow for a very high and compelling value proposition. 2. Utilize Value Analytics To Calibrate Market Positioning Price products based on the value delivered to the customer versus the next best alternative. This not only meets the needs of specific customer segments and competitive positions, but also ensures that the firm is designing and delivering the right level of value for the cost and return thresholds. There are two fundamental types of value analytics used by leading companies: Economic Value Bridges are most effective when the value proposition can be defined economically, in terms of reduced cost of ownership, increased sales productivity, greater asset utilization, etc. Value Mapping is used to depict the landscape of competitive offerings against two axes- price and perceived benefits- when product differentials are more perceptual and qualitative. 3. Treat Target Price As A Design Requirement By collaborating internally for early alignment on the value story, supported with solid value analytics, companies establish a clear target price and performance specifications for the product development stage. When unfavorable cost variations arise during development, leading practitioners resist the impulse to let the target price drift and remain committed to a justifiable value proposition. What are your best practices in pricing? Questions? Leave them below!
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