PHASE 9: PRICE LEVEL OPTIMIZATION
Determine the viable price range and optimized price for customers based on their willingness-to-pay.
Value based pricing is the single largest factor in increasing your profitability as a business. In B2B markets, there is no single “right” price for a customer. Customer willingness-to-pay encompasses a range of viable price points. Understanding that range through Van Westendorp, Gabor-Granger and similar techniques is critical to optimize price levels and to prevent value from slipping through your fingers. Studies of historical win rates, market projections and financial modeling allows an executive to make small changes that make material impacts to the top and bottom lines at almost zero cost.
Rapid Diagnostic
1. You have a strategy for price setting (Cost-plus, Risk-based, Value-based).
2. You know at what price your customers and prospects consider your product to be a good deal.
3. You know at what price your customers and prospects begin to consider your product to be expensive, but still think it is worth considering.
4. You know the price your customers and prospects would consider your product to be too expensive to even consider.
5. You know the price below which your customers and prospects would consider your product to be so cheap that they would question the quality.
6. You know how your win rates change as you increase price from the too cheap level to the too expensive level.
7. You know the “revenue-maximizing” price point (i.e., the single price point at which revenue would be maximized).
8. You know the “profit-maximizing” price point (i.e., the single price point at which profit would be maximized).
9. You know the “penetration-maximizing” price point (i.e., the single price point at which penetration would be maximized).
10. Your prices currently reflect and/or overcome the key psychological thresholds (i.e., the prices above which a significant proportion of the population will no longer buy).
Deliverables
• Price Level Assessment
• Van Westendorp Pricing Levels
• Price Optimization Analysis
• Revenue Risk Modeling
• Price List Construction
• Pricing Setting Manual
