/ PRICE VS. VALUE

Pricing needs strategy

Avoid reactive pricing

A successful pricing strategy always includes a plan for different scenarios. What do we do if the competitor lowers prices? What do we do when a new product in our category comes onto the market? What do we do if sales do not start as planned?

There are many possible reasons for having to rethink your pricing strategy. But the good news is that most of them are no surprise. You can develop a battle plan in advance for each scenario as to how you want to deal with these imponderables.




THE MOST IMPORTANT RULE:

Price cuts must be the very last option. Not the first.



But unfortunately the opposite is often the case. For many reasons, price cuts may be the easiest option, but they are not the best. It is not uncommon for the price screw to be tightened as soon as the first difficulties arise - even before any attempt has even been made to get the problem under control with measures other than a price reduction.



In most cases, price reductions are exactly the wrong signal.

Because they lead to the EROSION of profits and customer lifetime value.



If at all, then price reductions should be a strategic decision, and the consequences should be known and deliberately chosen. Because in order to reduce prices, you need to get something back that will pay off in the long run.

Only then can a price reduction be an investment - and not just a short-term reaction to bad figures.

                                                      



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