Price Check - Position your Pricing for Profits

Your topenterprise Price Check will help you to find
- The right prices for your customers
- And the right prices for your business.

09 04 2007 United Kingdom

Here are extracts from the Price Check Workbook, as a sample of what you will receive when you sign-up for this service.

Each chapter is a bite-size guide to an important feature of pricing, for you to use - at your own pace – in conjunction with e-mentoring support from topenterprise.

Contents of the Price Check Workbook

Chapter One - see sample below
Introduction to pricing
Cost-plus method and value-based pricing
Costs determine your profit, not your price

Chapter Two
Position your product/service and price
How you can use product positioning to gain advantage
over other similar products

Chapter Three
Product lifecycle
How this influences your marketing, your costs and prices
Managing a portfolio of several products/services

Chapter Four
Factors that affect the demand and pricing of what you sell
Customer benefits, value, perception and demand

Chapter Five
Setting your business goals and marketing strategy

Chapter Six
Costs, prices, breakeven and profit

Plus -

10 Pricing Strategies for you to choose from
Up to three hours’ e-mentoring support over six weeks

And a special bonus offer - Pricing Tactics, our unique guide to price discounts and sales promotions. *

Chapter One

It’s easy to under-price what you sell

Pricing is one of the most important decisions facing the owner of a small business. According to a report by McKinsey (consultants), at least 80% of pricing errors result in under-pricing of goods and services - and lost profits.

Pricing makes a strong impact on

The volume of products and services you sell,
The contribution they make to profits
And the perceptions and opinions that people have about you and your business.

But pricing is a double-edged sword. If you charge too much you will probably lose customers as well as sales, so it’s often easier to make sure of the sale by coming in at a low price, which lowers your profit too.

A low price does not always mean more sales. If you charge too little for a product, customers might think it is too cheap to be worthwhile and go elsewhere. Prices are more than just what customers pay; they convey messages about your business and what you sell.

These messages influence their buying decisions now and into the future, so it is important not to take a short-term view about pricing.

Cost-plus method

This is one way of pricing. Put very simply, you divide your overall costs by the number of sales you expect to make and then add a percentage for your profit margin. It is fairly straightforward to use and the result is the price you are prepared to sell at.

This method is often used by retailers because they can rapidly set the prices for a large number of lines based on the bought-in cost of an item, their knowledge of the market and any seasonal variations.

For a manufacturer the direct costs might include raw materials, direct labour and machine set-up costs. Pricing an engineering or IT project would be based on time (labour), materials, travel and preparation costs, plus other overheads.

But what about the realities of the marketplace? Will customers actually buy your product at this price in sufficient volume to cover the direct costs, plus the overheads and your expected profit margin too?

Costs determine your profit, not your price

The cost of buying or producing goods or delivering a service is not the most important factor in deciding prices.

After all, why should customers decide to buy at a price that is based on your costs? If your costs and your prices are too high for the market, you might not sell enough to make any profit.

Yes, you need to make sure that sales will cover your costs and give you a margin on top, but the cost-plus method of calculating prices does not determine the level at which customers will buy in sufficient quantity to make the business viable.

If you set your mark-up and prices too low, this might give customers the wrong idea about your business and the quality of your product or service, so you lose sales and make even less profit.

Cost-plus has several serious drawbacks:

In a free market, it is the realities of the market that determine the price at which your products or services will sell. Your costs determine the ‘price floor’ at which sales become profitable.
Competitors might have costs that are much lower than yours, so they could afford to charge lower prices. You would be very vulnerable if you followed their prices and they then decide to reduce them.
It can be especially risky for start-up businesses, where inexperience can often result in under-pricing and low profits.

Value-based method

Chapter Two explains this alternative to cost-plus pricing - the price based on the value customers place on the product or service, and how they perceive your business.

The types of customers that you sell to, the packaging, where and how you promote sales – these are all closely linked to the price. Together these influence customers’ perceptions and determine how much you can sell, at what price.

Getting the right price

Price Check covers products and services sold to businesses as well as to consumers. It takes you through the key factors in arriving at the right prices for your products and services:: The right price for your customers; and the right price for your business.

There are four common approaches for positioning your prices and products. In Chapter Two you can learn about

How to position what you sell,
Why positioning influences the way that customers perceive your business,
How it affects competition with your rivals and
How to find gaps in the market that you might exploit.

Save several hundred pounds with your topenterprise Price Check

*

Price Check saves you time and money going on a training course about pricing.

Price Check gives the complete picture that you cannot find in a book or on the Internet - except on topenterprise of course.

All of this costs only £69, including VAT and up to three hours’ e-mentoring support via email over six weeks.

And you get a special bonus - our unique guide to pricing tactics, sales promotions and price discounts.

*

For further details about the Price Check offer, terms and availability

Please email: info@topenterprise.co.uk