What is pricing strategy? WTF Marketing Jargon Busting 023
What is Pricing Strategy? WTF Marketing Jargon Busting 023
01:13 What is pricing strategy?
03:21 Who should be concerned about pricing strategy?
21:38 How do you do pricing strategy?
29:09 When should you do pricing strategy?
Hello there, my name is Martin Henley. This is the What The series and in episode number 23, that’s this episode, we’re answering the important questions. What is Pricing Strategy? And if there are 33 pricing strategies available, shouldn’t you have one?
In addressing the question and delivering the huge value of pricing strategy to you, there are five things that we will be covering. We will of course be answering the question, what is pricing strategy? We’ll be answering the question who should be involved with pricing strategy, or concerned with pricing strategy? How do customers feel about pricing? How do you do pricing strategy? And when do you do pricing strategy? Let’s get this started Clay.
So if we are going to understand pricing strategy, we are going to need a definition. And we started with this definition of price from Oxford Languages. What they tell us is that price is a verb. Now, I think we all know that price is a verb, certainly pricing is a verb, it’s a doing word. I think the challenge might be that we think pricing is something that’s done to us by our customers or our competitors or our market rather than something that we do for ourselves. However, Oxford Languages tell us that the doing of pricing strategy is deciding the amount required as payment for something offered for sale. So what I’m here to tell you today is the pricing strategy is something that you should be doing in your business to give your business the very best chance of success.
We all know that there’s an issue with pricing. So we went also to this description from Profitwell, in their article talking about pricing strategy guides, choosing pricing strategies that grow as opposed to sync your business. And they tell us this, too many businesses set their pricing without putting much thought into it. This is a mistake causing them to leave money on the table from the beginning. The good news is that taking the time to get your product pricing right can act as a powerful growth lever. If you optimise your pricing strategy so that more people are paying a higher amount, you’ll end up with significantly more revenue than a business who trades by pricing more passively.
This sounds obvious, but it’s rare for businesses to put much effort into finding the best pricing strategy. Now this is 100% true, businesses aren’t putting enough energy into their pricing, they are leaving money on the table. And more importantly than that, they are putting themselves under ridiculous pressure, trying to deliver the very best value for the very lowest price, which is why it’s a good job. You found us today and started thinking about pricing strategy.
That brings us to question number two, which is who should be concerned about price? And the answer, of course, and you won’t be surprised to know at all that it’s you. If you want to have a more successful business, drive a nicer car, live in a nicer house, take nicer holidays, enjoy a nicer retirement, then you need to make sure that you are working towards the optimal price for the products and services that you provide.
The optimal price is the price that does everything you need it to do in terms of profitability, and everything your customers needed to do in terms of value. If you find the optimal price for your products and services, you are in a very near perfect situation. And you will work after work incredibly hard to disrupt or to damage that business. Now, the good news about this is you are absolutely 100% in control of what you charge.
I know you don’t think that’s the case. But I’m here today to tell you that actually thinking about what you charge working towards that optimal price is the best thing you can do today to actually improve the profitability of your business. Unless of course, you have no control whatsoever over your products and services, because you are working in a commoditised situation. Now a commoditised industry is an industry where one set of products and services from one supplier are completely indistinguishable from the products and services offered by another supplier, except for the price. Now in this instance, nobody is going to want to pay more if they are buying exactly the same thing.
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