In a free market, competition is the norm, not the exception, and that competition will affect how you price. When competitors lower prices or new competition enters at a lower price, it is perhaps only natural to want to beat them at their own game - but the cost of price concessions may be higher than the cost of losing a customer or two.
Pricing is the single greatest lever you have to improve profitability, and your profits will increase further when you price strategically. Strategic pricing is about proactively creating the conditions under which better and more-profitable pricing outcomes are the natural result. So, what exactly is Strategic Pricing?
Bet you thought that manufacturing in the UK was in the doldrums, at least in comparison with our glorious past? Well, think again. Nobody is denying that there have been some very tough times and the current situation with Tata Steel exemplifies what happens when a proud and once successful industry is fighting for survival. It's been a tough few weeks for the UK manufacturing sector and undeniably jobs are likely to go.
What does a CEO do?
In an earlier article we looked at what makes a high performing Pricing Manager. Now it's the turn of the CEO. Every type of business you can think of will have a Chief Executive Officer or Managing Director at the helm, and the specific tasks can vary according to the industry and the size of the company. However, put simply, a CEO does everything! Even if they aren't the person who actually does it, they are the person who has told someone to do it, or told someone who tells someone to do it. If you think of a business as a triangle, they're sat at the top, controlling everything below.
Aerospace manufacturing is a high-technology industry that produces "aircraft, guided missiles, space vehicles, aircraft engines, propulsion units, and related parts". Most of the industry is geared toward governmental work.
It is technology that allows businesses to be global operators, and even the smallest business can now have clients in every time zone. Different countries and different cultures may have different preferences, however and what sells well in one place may never sell in another.
Students of economics are taught that a business maximizes profits by producing up to the point at which marginal cost equals marginal revenue. This is true in theory - and actually irrelevant in practice.
We know the expression that men are from Mars, women from Venus – well it seems that where women and shopping are concerned, the prices are more expensive whatever planet they are shopping on!!
Manufacturers face their own unique pricing challenges: ever-changing products and the challenge of accurately estimating a fair market price/value for those products.
A subscription-based pricing model is a payment structure that allows a customer or organization to purchase or subscribe to a service for a specific period of time for a set price. Subscribers typically commit to the services on a monthly, annual or seasonal basis.
Pricing matters - it's one of the classic “4 Ps” of marketing (product, price, place, promotion). It will be a key element of every B2C and B2B strategic plans. A case in point would be Bryant Homes Pricing Strategy. They operate in a highly competitive market but Bryant is able to price its products in the premium range because it offers some of the very best homes (product), in attractive and sought after locations (place) and its promotional literature reflects an upmarket image.
Quoting in B2B can be complex - there are many challenges to navigate before the deal is finally sealed – and the nature of B2B does create some special difficulties when it comes to quoting. Lets look at some of the challenges you may currently be facing, and see how they could be resolved.