The 6-Step Pricing Strategy
Step 1: Price Segmentation
When you plan your pricing strategy, you accomplish three objectives. First, you focus on markets where you can develop and exercise pricing power. Second, you prioritize accounts that appreciate your value proposition and that are willing to pay for it. And third, you understand how pricing impacts how your buyers make purchase decisions.
Focus on the markets where you can develop and exercise pricing power.
Prioritize accounts that appreciate your value proposition and are willing to pay for it.
Understand how pricing impacts how executives make purchase decisions.
Step 2: Price Positioning
With great price positioning, the pricing team consistently matches the business objectives of your growth strategy to your pricing strategy. From here, the pricing team understands and influences buyer perceptions through the development distribution of competitive pricing positioning.
Match the business objectives of your growth strategy to your pricing strategy.
Understand and influence buyer perception.
Step 3: Price Structure
First, you should select and maintain a revenue model that will meet your business objectives. Second, you should design product versions that allow customers to buy faster. Third, you scale your pricing to customers with different willingness-to-pay thresholds. Then, you package multiple solutions together to raise average sale prices. Finally, you grow revenues through continuous monetization efforts.
Select a revenue model that will meet your objectives and satisfy the needs of your customers.
Design product versions that allow customers to choose their own price point and buy faster.
Choose appropriate metrics or fences to scale your pricing to customers with different willingness-to-pay.
Package multiple products or solutions together to raise average sale prices.
Set yourself up to grow customer revenues over time.
Step 4: Price Levels
Price levels help you optimize your price levels and provide structured discounting in several ways. First, you determine the viable price range and continuously optimize price levels for customers based on their willingness-to-pay. Then as needed, you discount strategically in order to increase sales volume and average deal size.
Determine the viable price range and optimized price for customers based on their willingness-to-pay.
Discount strategically to increase sales volume and average deal size.
Step 5: Price Execution
Price execution enables you to drive up the customer’s willingness-to-pay with compelling, value-based messaging. You can then arm your sales force with negotiation techniques and guidelines to win deals that maximize price. This is how you improve adherence to your pricing strategy by aligning it to the sales team’s incentives and compensation plans. Finally, you actively track the right key performance indicators (KPIs) to ensure your pricing strategy is successful.
Drive up the customer’s willingness-to-pay with compelling messaging.
Arm your sales force with techniques to win deals at maximum price.
Improve adherence to your pricing strategy by aligning it to the sales team’s incentives.
Track the right metrics to ensure your pricing strategy is successful.
Step 6: Pricing Infrastructure
When developing your pricing infrastructure, you choose the appropriate pricing tools, systems, and software to help execute on your pricing strategy. Your internal pricing organization should be designed to produce and execute upon future pricing strategies through disciplined pricing governance.
Choose appropriate price software to help execute on your pricing strategy.
Design an internal pricing organization to produce and execute upon future pricing strategies.
Would you like to explore how SBI can help with your pricing strategy?
Request an introductory call with Jacqueline Davis, SBI’s practice leader for Pricing Strategy. Simply fill out this to request an introductory call and Jacqueline will provide you with your own copy of the 92-page Pricing Strategy Workbook as a guide for your call.
And check out Jacqueline’s most recent pricing blog “Three Reasons Companies Struggle to Execute Value-Based Pricing Strategies”.