Getting Pricing Right

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Date: 01/05/2011

As buyers become more sophisticated, businesses need to think carefully about their pricing strategy. Segmenting the customer base and avoiding the "cost plus" mark-up trap are the way to go.

A "one size fits all" approach won't serve businesses well when it comes to pricing, and sustained discounting isn't the answer either. Ron Wood, director of specialist consultancy Pricing Insight, says a successful pricing strategy will be based on segmenting the customer base to develop appropriate pricing for each group, then equipping sales forces to understand the value of the products on offer. Avoid "cost plus" pricing at all costs - it can mean either underpricing and losing margin, or overpricing and losing sales.