Being able to shape your own future, making the best possible investment choices within the context of your available capacity and resources, is one of the most important reasons to become an entrepreneur, a manager of a business unit. To optimize your options you need profit. Profit is a gateway to strengthen your company, excel on marketing and innovation. Therefor our statement is:
Profit is not an option, it’s a duty. – Peter Gouw
Through better pricing every company is able to increase their profit level. The double down side is that most managers use pricing most frequently in a negative way by lowering prices whenever their sales needs a push (eventual temporally in combination with promotions). Secondly pricing is perhaps the most difficult marketing-mix element to execute in a positive way. Because every price rise is a potential volume and/or client loss. And we don’t want that, do we? But if we executed a price change well, professionally, it’s the most rewarding one. A 1% price rise leads on average to an 11% profit rise, no other element is that strong. Through building a price house, based on your vision why, how and what you want to be with your pricing in e.g. 3 years, you are able to stir in a structured manner your pricing and profit in a much better way.
Knowing upfront how to anticipate on every possible trap in the market or counter action your competitors. Connecting to the needs of your customers in a fair and constructive way by differentiation where possible, or cheaper where you have to be. Controlling discounts and “emotional” reactions on competitors actions. Protecting your brand values and giving your sales people the right arguments to counter react on standard answers of customers telling you that you are too expensive. Pricing requires continuous attention (what’s happening now) with a long term focus where you want to end in a few years. This is way pricing is a huge challenge, but a very rewarding one.