Pricing has never been more complex for companies. Increased competition, unparalleled transparency via the Internet, and the commoditization of many products and services has made pricing perplexing, to say the least.
Yet, many companies are still using the same techniques (or lack thereof) to determine their pricing strategy. Whether it is analyzing market segments, demand or competition those approaches are just not working anymore. All the while, there continues to be too much reliance on “matching” the price of the competition, a lack of true measurement and use of price sensitivity, failure to capitalize on brand preference, and reliance upon rule-based approaches rather than true optimization.
However, the utilization of sophisticated analytics coupled with precision price positioning can give companies an edge on their competition. This approach takes a customer-centric view of pricing, and aligns it with the customers thought process and perception within the marketplace. Instead of looking solely at the absolute price of a product, it optimizes price based on relative position versus your competitors. In addition, precision price positioning considers the same key factors retailers and sellers manually consider now, including demand and availability, price sensitivity, and competitor pricing. This approach understands the tradeoffs customers make regarding convenience, quality, brand, and price.
Leveraging precision price positioning within your organization can provide immediate benefit through top line revenue increases. In fact, companies across multiple industries have seen revenue gains of 3 percent and higher based on this approach. Additionally, precision price positioning allows sellers to set a pricing strategy with confidence, make proactive pricing decisions, and understand when they need to respond to the competition and when they don’t.
The benefits of precision price positioning go beyond the top and bottom line. It ensures alignment of strategies and tactics, allows sellers to quantify their brand premium, and gives them more time to think strategically about pricing instead of simply reacting to the market.