For those of you who received our 2015 Calendar, you will know that July is all about pricing strategy. A carefully considered pricing strategy is vital to optimising both sales volume and profit. Despite this, only one-in-ten b2b companies have a formal strategy in place.
The manipulation of prices, both upwards and downwards, offers enormous potential for increased profits. A famous study by McKinsey determined that for most companies, a 1% increase in price would generate an 8% increase in operating profit.
The key thing to remember is that you have to make the right move at the right time. This requires an understanding of how price changes will impact on sales. For example, if a small decrease in price results in a disproportionately high increase in sales, decreasing the price may be a worthwhile move.
This is where a carefully considered pricing strategy becomes useful. Price is one of the most important ways in which customers choose between different products and services, and knowing the optimum price that you should charge to maximise sales and profits is key to beating the competition.
To learn more about developing a pricing strategy, including how you can make the most out of price manipulation, take a look at this month’s featured article by clicking the link below.