There are three ways of increasing profits: sell more, cut our costs, or raise existing prices.

Selling more and cutting costs are not easy, but raising prices, in principle, is very easy indeed - change the price ticket and price list and tell the sales force to raise prices by 5%.  Costs remain the same and therefore the 5% price rise becomes an immediate 5% profit increase!

Of course, we all know that there is an inverse relationship between price charged and volume purchased.  Once we increase prices, customers may start to look elsewhere for a better deal.

It is therefore useful to broaden the discussion and think about value – the trade-off between the benefits a customer receives from a product or service and the price they are willing to pay for it.  Customers rarely buy on price alone – rather, they are driven by the disparity between the package of benefits they receive and the price they are charged for them.  Key pricing questions are therefore:

• How much more will a customer pay for an added value service or product?
• How much of a reduction in service/product requirement would necessitate a price decrease?

Pricing research can help us answer all kinds of questions about pricing: 

• Statistical techniques such as conjoint analysis and SIMALTO are used to calculate what prices the market would bear for different types of offering
• Segmentation and needs analysis studies highlight the relative importance of different attributes, allowing you to decide which to offer and therefore charge for, and which not to offer and therefore exclude from your price
• Competitive pricing research involves obtaining and analyzing the prices of competitors in order that these can be benchmarked against your Clients’ prices

Whatever you want to know about pricing in your markets, B2B International will provide you with a solution.