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How To Price Effectively

Utpal Dholakia

How To Price Effectively

18min

18min

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How to Price Effectively is a practical and complete guide to help entrepreneurs and managers make good pricing decisions. Setting the price of a product is not only a crucial task in the long list of activities a company has to do, but it is also one of the most difficult, as well as being an ongoing process. Periodically, the time for price setting comes back around for every entrepreneur, having to update existing prices, or to set new ones. Utpal Dholakia proposes a strategy to optimise the decisional process, studying and analysing costs, customer value, reference prices and the company’s own value proposal.

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Analysis and key concepts

01.

It is important to have a structured method that helps us to determine the price of our products and services

02.

Setting prices is a crucial task for any company so it requires a lot of attention

03.

To set the right price, we need to consider costs, value for the client, reference pricing, and our value proposal

04.

Costs are an essential consideration when setting prices, but we should not neglect the other factors

05.

For the customer, value is determined by the benefits they obtain from the purchase and use of our products

06.

Reference prices are important to establish whether a product is expensive, low-cost or reasonable

07.

Using reference prices to influence customer choice

08.

A product’s pricing strategy needs to be consistent with it company’s value proposal

09.

There is a big difference between deciding on a price, applying it to the product and collecting exactly that figure

10.

A good pricing strategy is also measured by the level of customer and collaborator satisfaction

11.

Defining B2B pricing using a value based strategy

12.

Value based pricing needs to factor in that most buying decisions are based on impulse

13.

Quotes

14.

Take-home message

01. It is important to have a structured method that helps us to determine the price of our products and services

Pricing is one of the most impactful aspects of any business, but it is also one of the factors that both managers and entrepreneurs fear the most. It is a kind of recurring decision that isn’t made just once, to remain the same forever, but that requires continuous analysis and updates. In fact, all companies find themselves regularly having to set pricing for new products, or to change the pricing of already existing ones. The way a product’s price is set is rooted in the company culture and is heavily influenced by its value system. Since every choice carries a certain risk, having a structured model in place could prove to be extremely helpful for a company. The value pricing framework (a marketing model based on value) offers a tried and tested method, to help make and implement good pricing decisions, which is structured, versatile and complete. The framework is useful to convey trust in our products, and to satisfy both our clients and trading partners, while also providing ourselves with a better understanding of all the factors that affect pricing decisions.

02. Setting prices is a crucial task for any company so it requires a lot of attention

03. To set the right price, we need to consider costs, value for the client, reference pricing, and our value proposal

04. Costs are an essential consideration when setting prices, but we should not neglect the other factors

05. For the customer, value is determined by the benefits they obtain from the purchase and use of our products

06. Reference prices are important to establish whether a product is expensive, low-cost or reasonable

07. Using reference prices to influence customer choice

08. A product’s pricing strategy needs to be consistent with it company’s value proposal

09. There is a big difference between deciding on a price, applying it to the product and collecting exactly that figure

10. A good pricing strategy is also measured by the level of customer and collaborator satisfaction

11. Defining B2B pricing using a value based strategy

12. Value based pricing needs to factor in that most buying decisions are based on impulse

13. Quotes

14. Take-home message

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Many useful tips to:

  • Help managers and entrepreneurs structure a method for making pricing decisions.
  • Understand that an effective pricing strategy is a company’s most valuable marketing tool for driving profits.
  • Demonstrate that the price of a product needs to be consistent with the company philosophy and value offer.

Utpal Dholakia is a lecturer at the Rice University of Houston, Texas. He teaches marketing and pricing strategy, and his research interests span from consumer buying behaviour to digital marketing. He has consulted for many companies in the financial, technological and health sector, and writes a column for the magazine Psychology Today.

Publishing house:

Utpal Dholakia

Year:

2017

Pages:

301

ISBN:

978-0999186718