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Other Added - Pricing: The Final Frontier
Upper Saddle River, N.J. - January 10, 2005 - With the start of the year, a flurry of articles have appeared, talking about what we can expect in the way of business trends during 2005. One of the most alarming issues is the intention of many employees to seek new jobs now that the economy is starting to improve. A recent joint survey by Society for Human Resources Management (SHRM) and CareerJournal.com indicated that 75% of the employees polled said they would like a different job; 43% want to increase their compensation. Similarly, a recent survey by Monster.com indicated “93% of the respondents plan to job hop.”Many companies have taken credit for the
Value Pricing:
Definition: Gives your customer more quality for less than they expected to pay.
Example: Used when you want to gain market share, position your product with customers, or obtain market acceptance of a new product.
Caution: Product quality must be consistent and your company must operate efficiently for this to be an effective strategy. Using this strategy means that you understand your customers and competitors very well. In addition, you may find it difficult to raise prices to more profitable levels once your initial distribution goal is achieved.
3. TEST YOUR PRICING THEORY
Pricing your products is almost as complex as rocket science but not quite as predictable. At best, your product pricing is based on information that can change daily or even hourly. For that reason, it is critical that you test the validity of your pricing strategies with a small customer sample or market segment and evaluate your pricing periodically to adapt to changing
In my state, your hair is cut by a licensed professional, but no license or proof of competency is required to schedule your radio and television advertising. It is standard industry practice for broadcast outlets to hire people without training or experience and have them proposing advertising schedules in a very short period of time. The likelihood of your advertising money getting wasted is high, and it’s intolerable.Repetition is the soul of advertising. A person must hear your message regularly. If she doesn’t, she forgets you, and she will do business with someone who is continually telling her about himself. How often the exposure depends u
How do you price your product now? Answers from businesses can vary from "less than our competition" to "the highest price my customer will pay." Either tactic has a negative side that can cost your company customers and profits. Because most of you are too busy to be rocket scientists in the pricing galaxy, we developed this series of steps to help you understand pricing - no space ship required.
1. DO YOUR HOMEWORK
Know Costs: There is no substitute for thoroughly understanding your product costs and the variability of those costs - that means the resources used to create, produce and market your product. Unless you know all your costs by product and by customer you could be losing, rather than making, money with each sale.
Understand Market Value: Realistically compare your company's product to your customer's expectations and perceptions. You must also understand your competition and trends in your target industry.
Set Objectives: Once you have a thorough understanding of your costs it's time to explore two of the ways your company can set pricing objectives. Generally, pricing philosophy is based on company goals such as:
Sales Growth - For a variety of reasons, such as immediate expansion needs, a company may set sales growth as an objective. When selecting this as an objective, it is critical to remember that higher sales do not automatically produce higher profits. In fact, sometimes the cost of expanding sales volume, such as increased costs of production, distribution or customer service, becomes so great that profits actually decrease.
Profit Growth - Frequently, corporate goals such as a targeted return on investment or a profit maximization philosophy necessitate a "pricing for profit" objective. Be sure you take both short and long-term profit goals into account when implementing this objective. Also, study the implications of each pricing change on the health of your business.
2. SELECT YOUR STRATEGY
It's now time to select your pricing strategy based on your costs, company objectives and the perceived market value of your product. Although strategies can become quite complicated and detailed, the following list discusses basic options most companies find useful. Your choice depends on an internal assessment of your company's objectives and an objective analysis of the market in which you compete.
Cost-Based Pricing:
Definition: Price is based on a product's total fixed and variable costs.
Example: Typical pricing in commodity markets. For example, a commodity-type raw product such as steel is priced using a standard formula based on cost.
Caution: If you use this exclusively, you must be able to stay in business with a very low profit margin. In non-commodity businesses, this option should be only one aspect of the total product pricing strategy.
Demand-Based Pricing:
Definition: Price depends upon your customers' perception of your products' value and the level of demand for your item. Your product must provide a unique benefit to your target market.
Example: Your product has prestige appeal so it can be priced in a range well above the cost of production. For example, luxury cars and gourmet food have prestige appeal.
Caution: Success depends on your knowledge of your customers and your market. You must have an uncanny skill for accurately estimating customer demand to avoid disappointing sales results.
Competition-Based Pricing:
Definition: Price is set in relationship to your competition's prices. In some cases this may be below cost and is usually indicative of a product that has no competitive edge.
Example: You are caught in an industry "price war" where all products must compete on the basis of price or risk losing their market share.
Caution: Your company's long-term goals may be sacrificed in the interest of competitive pricing. Also, you are at the mercy of the larger companies in your industry that can afford short-term losses in order to play this expensive game of war.
Value Pricing:
Definition: Gives your customer more quality for less than they expected to pay.
Example: Used when you want to gain market share, position your product with customers, or obtain market acceptance of a new product.
Caution: Product quality must be consistent and your company must operate efficiently for this to be an effective strategy. Using this strategy means that you understand your customers and competitors very well. In addition, you may find it difficult to raise prices to more profitable levels once your initial distribution goal is achieved.
3. TEST YOUR PRICING THEORY
Pricing your products is almost as complex as rocket science but not quite as predictable. At best, your product pricing is based on information that can change daily or even hourly. For that reason, it is critical that you test the validity of your pricing strategies with a small customer sample or market segment and evaluate your pricing periodically to adapt to changing
Everybody has their own point of view on every subject. In this world, our point of view, at least in our minds, is the right one. Well, that is no different in the world of medical billing. The patients think they should be paid for the claims, the medical billing companies want the patients to get paid for their claims so they can make their money and certainly the doctors want the patients to get paid for their claims or they'll go to another doctor. But what about the insurance carriers? It seems that they are the last people who want to pay claims. Well, this is for a very good reason. While everybody else is getting paid, the insurance carriers are payi
Set Objectives: Once you have a thorough understanding of your costs it's time to explore two of the ways your company can set pricing objectives. Generally, pricing philosophy is based on company goals such as:
Sales Growth - For a variety of reasons, such as immediate expansion needs, a company may set sales growth as an objective. When selecting this as an objective, it is critical to remember that higher sales do not automatically produce higher profits. In fact, sometimes the cost of expanding sales volume, such as increased costs of production, distribution or customer service, becomes so great that profits actually decrease.
Profit Growth - Frequently, corporate goals such as a targeted return on investment or a profit maximization philosophy necessitate a "pricing for profit" objective. Be sure you take both short and long-term profit goals into account when implementing this objective. Also, study the implications of each pricing change on the health of your business.
2. SELECT YOUR STRATEGY
It's now time to select your pricing strategy based on your costs, company objectives and the perceived market value of your product. Although strategies can become quite complicated and detailed, the following list discusses basic options most companies find useful. Your choice depends on an internal assessment of your company's objectives and an objective analysis of the market in which you compete.
Cost-Based Pricing:
Definition: Price is based on a product's total fixed and variable costs.
Example: Typical pricing in commodity markets. For example, a commodity-type raw product such as steel is priced using a standard formula based on cost.
Caution: If you use this exclusively, you must be able to stay in business with a very low profit margin. In non-commodity businesses, this option should be only one aspect of the total product pricing strategy.
Demand-Based Pricing:
Definition: Price depends upon your customers' perception of your products' value and the level of demand for your item. Your product must provide a unique benefit to your target market.
Example: Your product has prestige appeal so it can be priced in a range well above the cost of production. For example, luxury cars and gourmet food have prestige appeal.
Caution: Success depends on your knowledge of your customers and your market. You must have an uncanny skill for accurately estimating customer demand to avoid disappointing sales results.
Competition-Based Pricing:
Definition: Price is set in relationship to your competition's prices. In some cases this may be below cost and is usually indicative of a product that has no competitive edge.
Example: You are caught in an industry "price war" where all products must compete on the basis of price or risk losing their market share.
Caution: Your company's long-term goals may be sacrificed in the interest of competitive pricing. Also, you are at the mercy of the larger companies in your industry that can afford short-term losses in order to play this expensive game of war.
Value Pricing:
Definition: Gives your customer more quality for less than they expected to pay.
Example: Used when you want to gain market share, position your product with customers, or obtain market acceptance of a new product.
Caution: Product quality must be consistent and your company must operate efficiently for this to be an effective strategy. Using this strategy means that you understand your customers and competitors very well. In addition, you may find it difficult to raise prices to more profitable levels once your initial distribution goal is achieved.
3. TEST YOUR PRICING THEORY
Pricing your products is almost as complex as rocket science but not quite as predictable. At best, your product pricing is based on information that can change daily or even hourly. For that reason, it is critical that you test the validity of your pricing strategies with a small customer sample or market segment and evaluate your pricing periodically to adapt to changing
Have you ever hesitated to make a decision? Have you ever considered why? Some people spend their whole lives being cautious about the decisions they make concerning relationships, careers, finances, education, even daily activities. They need to do things perfectly and the desire to control the outcome only keeps us stuck. It is like the story of the mules standing between to bales of hay: unable to decide which one to eat, afraid of making the wrong decision, they starve to death. For many having to decide is risky and people fear risk.Fear of making the wrong decision, is the reason people put off making a decision, instead they make biggest mistake of a
2. SELECT YOUR STRATEGY
It's now time to select your pricing strategy based on your costs, company objectives and the perceived market value of your product. Although strategies can become quite complicated and detailed, the following list discusses basic options most companies find useful. Your choice depends on an internal assessment of your company's objectives and an objective analysis of the market in which you compete.
Cost-Based Pricing:
Definition: Price is based on a product's total fixed and variable costs.
Example: Typical pricing in commodity markets. For example, a commodity-type raw product such as steel is priced using a standard formula based on cost.
Caution: If you use this exclusively, you must be able to stay in business with a very low profit margin. In non-commodity businesses, this option should be only one aspect of the total product pricing strategy.
Demand-Based Pricing:
Definition: Price depends upon your customers' perception of your products' value and the level of demand for your item. Your product must provide a unique benefit to your target market.
Example: Your product has prestige appeal so it can be priced in a range well above the cost of production. For example, luxury cars and gourmet food have prestige appeal.
Caution: Success depends on your knowledge of your customers and your market. You must have an uncanny skill for accurately estimating customer demand to avoid disappointing sales results.
Competition-Based Pricing:
Definition: Price is set in relationship to your competition's prices. In some cases this may be below cost and is usually indicative of a product that has no competitive edge.
Example: You are caught in an industry "price war" where all products must compete on the basis of price or risk losing their market share.
Caution: Your company's long-term goals may be sacrificed in the interest of competitive pricing. Also, you are at the mercy of the larger companies in your industry that can afford short-term losses in order to play this expensive game of war.
Value Pricing:
Definition: Gives your customer more quality for less than they expected to pay.
Example: Used when you want to gain market share, position your product with customers, or obtain market acceptance of a new product.
Caution: Product quality must be consistent and your company must operate efficiently for this to be an effective strategy. Using this strategy means that you understand your customers and competitors very well. In addition, you may find it difficult to raise prices to more profitable levels once your initial distribution goal is achieved.
3. TEST YOUR PRICING THEORY
Pricing your products is almost as complex as rocket science but not quite as predictable. At best, your product pricing is based on information that can change daily or even hourly. For that reason, it is critical that you test the validity of your pricing strategies with a small customer sample or market segment and evaluate your pricing periodically to adapt to changing
All work and no play can make employees a rather dull group, don’t you think? Depending on the type of company you are part of, there might be room to hold a couple of corporate parties, get-togethers or picnics throughout the year. If you should be in charge of organizing and planning this delicate task, there are plenty of ways to approach this responsibility. When it comes to the many types of corporate party themes you might come across, which ones sound like a good fit for your office? Below you will find a few popular corporate party occasions and ideas to consider:Christmas: Many corporate offices hold a Christmas party with spiced eggnog, mistletoe, a
Caution: Success depends on your knowledge of your customers and your market. You must have an uncanny skill for accurately estimating customer demand to avoid disappointing sales results.
Competition-Based Pricing:
Definition: Price is set in relationship to your competition's prices. In some cases this may be below cost and is usually indicative of a product that has no competitive edge.
Example: You are caught in an industry "price war" where all products must compete on the basis of price or risk losing their market share.
Caution: Your company's long-term goals may be sacrificed in the interest of competitive pricing. Also, you are at the mercy of the larger companies in your industry that can afford short-term losses in order to play this expensive game of war.
Value Pricing:
Definition: Gives your customer more quality for less than they expected to pay.
Example: Used when you want to gain market share, position your product with customers, or obtain market acceptance of a new product.
Caution: Product quality must be consistent and your company must operate efficiently for this to be an effective strategy. Using this strategy means that you understand your customers and competitors very well. In addition, you may find it difficult to raise prices to more profitable levels once your initial distribution goal is achieved.
3. TEST YOUR PRICING THEORY
Pricing your products is almost as complex as rocket science but not quite as predictable. At best, your product pricing is based on information that can change daily or even hourly. For that reason, it is critical that you test the validity of your pricing strategies with a small customer sample or market segment and evaluate your pricing periodically to adapt to changing
When many companies go downhill, they never recover. Far too many of them continue to fall right into oblivion. They either go out of business or just become irrelevant companies. We saw this vividly in the 2001 bear market. The vast majority of the Internet companies were gone within a year.Don’t let that happen to your business. With the current energy troubles, it’s important to start looking right now at ways you can pull a sagging business out of the dumps.There were some tech stocks that survived and are now thriving. What did these companies have that the others didn’t?There’s a lot to figuring it out, but let me give you one idea of what
Value Pricing:
Definition: Gives your customer more quality for less than they expected to pay.
Example: Used when you want to gain market share, position your product with customers, or obtain market acceptance of a new product.
Caution: Product quality must be consistent and your company must operate efficiently for this to be an effective strategy. Using this strategy means that you understand your customers and competitors very well. In addition, you may find it difficult to raise prices to more profitable levels once your initial distribution goal is achieved.
3. TEST YOUR PRICING THEORY
Pricing your products is almost as complex as rocket science but not quite as predictable. At best, your product pricing is based on information that can change daily or even hourly. For that reason, it is critical that you test the validity of your pricing strategies with a small customer sample or market segment and evaluate your pricing periodically to adapt to changing market conditions.
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