Business leaders spend hours in meetings discussing the pricing structure for certain products or services. Getting the price point just right is deemed so critical for many reasons, yet so many businesses get it wrong right out of the gate. As suggested in “Why Your Early Pricing is Wrong (And It Doesn’t Really Matter),” posted by Etienne Garbugli on LeanB2BBook.com, a pricing model is most often based on the cost of the product and pays little or no attention to value in the context of the buyer. The perceived benefit to the customer is the key factor to consider when setting a price.
Consider the products that luxury businesses use for strengthening their brand. Many products are well above traditional market price because they target a higher-end buyer. Similarly, businesses need to know their buyer, their authorized price points, and make sure they can reach the right decision-maker when making a sale. In short, price the customer and not the product or service. Contact BTerrell Group to learn more about choosing a value-based pricing model that satisfies customers and brings in the profits you expect.
By Brian Terrell of BTerrell Group, LLP, Intacct and Sage ERP & CRM provider based in Dallas.