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What are your revenue and cost drivers? What are your pricing objectives with this product? Interview the management team
Revenue: ______________________________ Increase profitability
Interview the sales force
Improve cash flow
Cost: ___________________________________ Review pricing across distribution channels
Increase market penetration
What are your financial benchmarks? Gain market share Benchmark your product against direct and
Sales revenue Reach a new market segment indirect competitors
Contributions Increase revenue per customer Analyze financial data
Net profit margins Impact competition Analyze historical data
Fill capacity and utilize resources
Introduce new product
Identify the Value of the Good or Service Identify and Analyze Your Target Market Analyze the Pricing Strategies
Monetary, i.e., unit, measurement, time Study the customer need (See pricing strategies section)
Benefits, i.e., cost incurred to receive benefit Study the size of the market
Exchange., i.e., value customer receives in Study the characteristics of the market
exchange for price
What does the customer value in your product? Analyze the Competitive Environment Select and Deliver Pricing Strategy
__________________________________
Identify direct competitors Communicate the value of the product
How is your value greater than the value of your
Study their pricing and business models Measure sales, contribution, and net profit margins
competitor? _________________________
Study customer solution alternatives If objectives not met, return to audit and adjust as
TIP: Use the 30 Value Elements for assistance
necessary
Pricing Strategies
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Penetration pricing: Price is artificially low to break into the market
Economy pricing: Everyday low price with the focus on low manufacturing/delivery cost
Premium pricing: High price for high value
Price skimming: Entering the market with a high price to recoup high costs, but once competitors enter and volume lowers the cost, the organization implements other pricing strategies
Promotional pricing: Discounts over a period, one-time deals
Psychological pricing: Price goods or services which triggers action. For example, charging 4.99 instead of $5.00
Versioning: Offer different tiers for your services or goods i.e., silver, gold, platinum
Sandwich or decoy pricing: High, medium and low priced item with the intent to drive customers to the medium-priced item
Competitive pricing: Set the price equal to what your competitors are charging
Value pricing: Based on the value your customers are willing to pay and possibly considering alternatives customers might choose
9 Step Pricing Decision Checklist Association of International Product Marketing and Management | www.aipmm.com | © 2017 ProdBOK®