Pricing Best Practices RISE 2011 Session
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Transcript of Pricing Best Practices RISE 2011 Session
© Business Success Center, Austin, TX 2011
With Jan Triplett, Ph.D. CEO, Business Success Center
© 2011 Austin, TX
Best Practices in Pricing
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Your Passion, BSC’s Expertise
• Our Mission: to help you find your way• Providing guided growth strategy & advice to achieve success since 1982• Sales, marketing, & financial management focus • Clients from A-Z industries, high tech to no tech, products & services• Top 20 Management Consulting Firm (ABJ Book of Lists); national & international recognition
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© Business Success Center, Austin, TX 2011
Your Company Focus?
B to B?B to C?
Better to be P to P
.)(. (Belly Button to Belly Button)
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© Business Success Center, Austin, TX 2011
Your Price is NEVER Right for Everyone
It’s all about:1. Getting the right customer2. Keeping the right customer3. Considering their perceived risk4. Knowing your true total costs5. Identifying the top value you bring6. Accounting for long & short term goals7. Know the laws
THEN you can price right & legally!
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© Business Success Center, Austin, TX 2010
Your Biggest Concern about PricingWhat keeps you up at night?
1. Losing too many customers.2. 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. Breaking the law with my pricing policies.7. None of the above.
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© Business Success Center, Austin, TX 2011
Attract paying customers who are:• Most Lucrative• Easiest Sale
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What’s Your Pricing Goal?Match the goal.
© Business Success Center, Austin, TX 2011
What Customer Do You Want?Set Your Prices Based on Them.
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
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© Business Success Center, Austin, TX 2011
Platinum customers are…
• VisionariesSee problem as you doSee value of your solution
• AdventurousConfident in youTrust you
• DecisiveHassle-free or less hassle
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© Business Success Center, Austin, TX 2011
A “Fair” Price
Dilemma: What’s fair to one; may not be fair to the other.
Customers want: To get good value, pay a fair price.
Sellers want: To give good value, get a fair price.
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© Business Success Center, Austin, TX 2011
What You Need to Know about Pricing
Pricing should be… Pricing will…
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An attention getter and qualifier.
A way to position your company.
Perceived by your Platinum-preferred client as a benefit not just a feature.
Make you rich or at least comfortable or just sick and tired.
Affect the success of all areas of the business.
Require that you don’t just set it & forget it.
© Business Success Center, Austin, TX 2011
The Big Pricing Policy Debate
CostVs.Value
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© Business Success Center, Austin, TX 2010
What Do Your Customers Want?
• More than a solution or something fixed.There are 6 Situational Outcomes™ they
value. (More at ownersview.com: http://bit.ly/gtdaVP)
There are 5 personal risks they are willing to take to get what they value at the price charged:
Social, Psychological, Functional, Physical, Financial• Set your prices based on your ability to deliver that outcome and reduce their risk.
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© Business Success Center, Austin, TX 2011
What Do You Want Customers To Do?Pricing Strategy Should Match Action.
Examples:• Try it• Stock up• Repeat buy• What else?
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© Business Success Center, Austin, TX 2011
Pricing Considerations
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Pricing is an emotional issue for you, your employees, & customers.
Buyer reaction to price is unpredictable.
Shoot from the hip & you’ll end up shot in the foot or worse.
One price strategy usually doesn’t fit all products/services.
Controlling costs can make a business more profitable than raising the price.
Stay alert: pricing laws & regulations change.
© Business Success Center, Austin, TX 2010
A Quick Word About Laws
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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 to mislead customers. Applicable to sales to businesses and consumers.http://www.statutes.legis.state.tx.us/SOTWDocs/BC/htm/BC.17.htm
2. Clayton Act (Robinson-Patman Act Amendment) — illegal to discriminate on price (except in some instances), tie or bundle purchasing contracts.
© Business Success Center, Austin, TX 2011
Best Practices in Pricing
• Price what you’re worth.• Use KISS pricing system.• Account for profit, contingency & hassle-factor.• Price for positioning.• Monitor & adjust.
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© Business Success Center, Austin, TX 2011
Worst Practices in Pricing
• Undervaluing your benefits.• Under-estimating costs.• Not considering your Platinum customer’s “Flinch Point”.• Blindly following competition.• Inconsistent pricing.• Violating laws - DTPA
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© Business Success Center, Austin, TX 2011
Good & Bad Pricing Examples
1.Charging $15 per hr for professional services2. Providing a $400 discount on a product3. Charging $500 for one research report4. Charging low price to get started5.Your examples?
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© Business Success Center, Austin, TX 2010
Pricing Practices Action Items1. 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
value outcome, your preferred positioning, meets legal requirements, includes profit and contingency as well as costs.
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For a copy of BSC’s Pricing Terms & Concepts Glossary or additional questions, please email me at [email protected].
Here’s to your
success!Jan Triplett
Jan Triplett
Blog: http://www.ownersview.com
Business Success Center
Sales & Financial Management Services
© Business Success Center, Austin, TX 2011
March 8, 2011