Best Practices in Pricing

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With Jan Triplett, Ph.D.CEO, Business Success Center

© 2011 Austin, TX

Best Practices in Pricing

© Business Success Center, Austin, TX 20111



Your Passion, BSC’s Expertise

• Our Mission: to help you find your way

• Providing guided growth to achieve success since 1982

• Sales, marketing, & financial management focus

• Clients from A-Z industries, high tech to no tech, products &services





Poll #1 Please tell me about you.1. Are you an

1. Owner2. Manager3. Employee

2. Size of business1. Less than 20 employees2. 20-99 employees3. 100-499

4. 500+3. What do you sell?

1. Primarily services2. Primarily products3. Products & Services

4. How old is the business?1. Not open2. Less than 5 years old3. More than 5 years old

5. Yearly revenue (average)1. Less than 500K2. 500K- Million3. Over a million




Poll #2 Your Biggest Concern about Pricing

Please indicate which ONE of the following is your biggest concern about your pricing.(Pick the one that keeps you up at night.)

1. Losing too many customers2. Not being competitively priced.

3. Leaving money on the table.4. Not being profitable enough on each sale.5. Afraid I am not accounting for all my costs (missing something).6. Afraid to adjust my price.7. Competitors under pricing me.8. Breaking the law with my pricing policies.9. None of the above.



Your Company Focus?

B to B?

B to C?

Better to be P to P

.)(.(Belly Button to Belly Button)





POLL 3

Who is your primary customer?1. Another business2. A consumer

3. A non profit business/association4. Business and consumer5. Government



Who’s your customer now?

Who’s your prospect now?

Platinum Gold Silver

Bronze Lead Concrete/Radio Active Waste

Platinum & Gold — create stabilitySilver — has potentialBronze — uncertainLead — a time wasterConcrete — a business killer & never satisfiedRadio Active Waste a long-lasting reputation &confidence destroyer




Platinum customers are…

• Visionaries

See problem as you do

See value of your solution

• Adventurous

Confident in you

Trust you• Decisive

Hassle-free or less hassle




What’s Your Desired Pricing Goal?

Attract paying customers who are:• Most Lucrative

• Easiest Sale





Poll 4

1. What customers do you currently focus on?1. Most lucrative (bring in most money over time)2. Easiest sale (most accessible)

2. What customers do you want to focus on?1. Most lucrative (bring in most money over time)2. Easiest sale (most accessible)



A “Fair” Price

Customers want: To get good value, pay a

fair price.

Sellers want: To give good value, get a fairprice.

Dilemma: What’s fair to one; may not

be fair to the other.




What Do You Want Customers To Do?

Examples:• Try it

• Stock up

• Repeat buy

• What else?




What Do Your Customers Want?

• More than a solution or something fixed. — There are 6 outcomes they value

— There are 5 personal risks they are willingto take to get what they value.




Pricing Considerations


Pricing is an emotionalissue for you, youremployees, & customers.

Buyer reaction to price isunpredictable.

Shoot from the hip & you’llend up shot in the foot orworse.

One price strategy usuallydoesn’t fit all products/services.

Controlling costs can makea business more profitablethan raising the price.

Stay alert: pricing laws &regulations change.



A Quick Word About Laws


Two key laws to be familiar with:

1. DTPA (Deceptive Trade Practices Act) — illegal to “bait &

switch” or any of the many other ways that are used tomislead customers. Applicable to sales to businesses andconsumers.http://www.statutes.legis.state.tx.us/SOTWDocs/BC/htm/BC.17.htm

2. Clayton Act (Robinson-Patman Act Amendment) — illegalto discriminate on price (except in some instances), tie or bundle purchasing contracts.



What You Need to Know about Pricing Pricing should be… Pricing will…


An attention getter and

qualifier. A way to position your

company.

Perceived by yourPlatinum-preferred clientas a benefit not just afeature.

Make you rich or at least

comfortable or just sickand tired.

Affect the success of allareas of the business.

Require that you don’t justset it & forget it.



Your Price is NOT Right for Everyone

It’s all about:

1. Getting the right customer2. Keeping the right customer

3. Considering their perceived risk4. Knowing your true total costs5. Identifying the top value you bring6. Accounting for long & short term goals

THEN Pricing Right & legally!




The Big Debate

Cost

Vs

Value





Poll 5

What is your current pricing based on?1. Competitor’s pricing2. Your costs3. The value you provide your customer

Who makes the pricing decisions in your company?1. You2. Sales Manager3. Financial Officer4. Owner5. Other



Best Practices in Pricing

• Price what you’re worth.

• Use KISS pricing system.

• Account for profit,contingency & hassle-factor.

• Price for positioning.• Monitor & adjust.




Worst Practices in Pricing

• Undervaluing your benefits.

• Under-estimating costs.• Not considering your Platinumcustomer’s “Flinch Point”.• Blindly following competition.

• Inconsistent pricing.• Violating laws - DTPA




Good & Bad Pricing Examples

1. Charging $15 per hr for professional services

2. Providing a $400 discount on a product

3. Charging $500 for one research report

4. Charging low price to get started

5. Your examples?




Pricing Practices Action Items

1. Make sure you have accounted for your true total costs.

2. Know the value of what you sell.

3. Ensure your pricing reflects your preferred customers valueoutcome, your preferred positioning, meets legal requirements,includes profit and contingency as well as costs.


For a copy of BSC’s Pricing Terms & Concepts Glossary or additionalquestions, please email me at [email protected].



Here’s to your

success! Jan Triplett

[email protected]

Jan Triplett

Blog: http://www.ownersview.com

Business Success CenterSales & Financial Management Services


February 10, 2011

Best Practices in Pricing

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