Best Practices in Pricing

With Jan Triplett, Ph.D. CEO, Business Success Center 2011 Austin, TX

Business Success Center, Austin, TX 2011

Your Passion, BSCs Expertise

Our Mission: to help you find your way Providing guided growth to achieve success since 1982 Sales, marketing, & financial management focus Clients from A-Z industries, high tech to no tech, products &

services

Business Success Center, Austin, TX 2011

Poll #1 Please tell me about you. 1. Are you an 1. Owner 2. Manager 3. Employee 2. Size of business 1. Less than 20 employees 2. 20-99 employees 3. 100-499 4. 500+ 3. What do you sell? 1. Primarily services 2. Primarily products 3. Products & Services 4. How old is the business? 1. Not open 2. Less than 5 years old 3. More than 5 years old 5. Yearly revenue (average) 1. Less than 500K 2. 500K- Million 3. Over a million Business Success Center, Austin, TX 2010

Poll #2 Your Biggest Concern about Pricing Please indicate which ONE of the following is your biggest concern about your pricing. (Pick the one that keeps you up at night.) 1. 2. 3. 4. 5. 6. 7. 8. 9. Losing too many customers Not being competitively priced. Leaving money on the table. Not being profitable enough on each sale. Afraid I am not accounting for all my costs (missing something). Afraid to adjust my price. Competitors under pricing me. Breaking the law with my pricing policies. None of the above.

Business Success Center, Austin, TX 2010

Your Company Focus?

B to B? B to C?

Better to be P to P

(Belly Button to Belly Button)

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.)(.

POLL 3 Who is your primary customer? 1. Another business 2. A consumer 3. A non profit business/association 4. Business and consumer 5. Government

Business Success Center, Austin, TX 2010

Whos your customer now? Whos your prospect now?

Platinum Bronze Gold Lead Silver Concrete/Radio Active Waste

Platinum & Gold create stability Silver has potential Bronze uncertain Lead a time waster Concrete a business killer & never satisfied Radio Active Waste a long-lasting reputation & confidence destroyer
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Platinum customers are

Visionaries See problem as you do See value of your solution Adventurous Confident in you Trust you Decisive Hassle-free or less hassle
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Whats Your Desired Pricing Goal?

Attract paying customers who are: Most Lucrative Easiest Sale

Business Success Center, Austin, TX 2011

Poll 4 1. What customers do you currently focus on? 1. Most lucrative (bring in most money over time) 2. Easiest sale (most accessible) 2. What customers do you want to focus on? 1. Most lucrative (bring in most money over time) 2. Easiest sale (most accessible)

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Business Success Center, Austin, TX 2010

A Fair Price
Customers want: To get good value, pay a fair price. Sellers want: To give good value, get a fair price. Dilemma: Whats fair to one; may not be fair to the other.
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What Do You Want Customers To Do?

Examples: Try it Stock up Repeat buy What else?

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Business Success Center, Austin, TX 2011

What Do Your Customers Want?

More than a solution or something fixed. There are 6 outcomes they value There are 5 personal risks they are willing to take to get what they value.

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Business Success Center, Austin, TX 2010

Pricing Considerations
Pricing is an emotional One price strategy usually

issue for you, your employees, & customers. Buyer reaction to price is unpredictable. Shoot from the hip & youll end up shot in the foot or worse.

doesnt fit all products/ services. Controlling costs can make a business more profitable than raising the price. Stay alert: pricing laws & regulations change.

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Business Success Center, Austin, TX 2011

A Quick Word About Laws

Two key laws to be familiar with:
1. DTPA (Deceptive Trade Practices Act) illegal to bait & switch or any of the many other ways that are used to mislead customers. Applicable to sales to businesses and consumers. http://www.statutes.legis.state.tx.us/SOTWDocs/BC/ htm/BC.17.htm 2. Clayton Act (Robinson-Patman Act Amendment) illegal to discriminate on price (except in some instances), tie or bundle purchasing contracts.
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What You Need to Know about Pricing

Pricing should be
An attention getter and

Pricing will
Make you rich or at least

qualifier. A way to position your company. Perceived by your Platinum-preferred client as a benefit not just a feature.
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comfortable or just sick and tired. Affect the success of all areas of the business. Require that you dont just set it & forget it.

Your Price is NOT Right for Everyone

Its all about: 1. Getting the right customer 2. Keeping the right customer 3. Considering their perceived risk 4. Knowing your true total costs 5. Identifying the top value you bring 6. Accounting for long & short term goals

THEN Pricing Right & legally!

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The Big Debate

Cost Vs Value

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Business Success Center, Austin, TX 2011

Poll 5 What is your current pricing based on? 1. Competitors pricing 2. Your costs 3. The value you provide your customer Who makes the pricing decisions in your company? 1. You 2. Sales Manager 3. Financial Officer 4. Owner 5. Other

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Business Success Center, Austin, TX 2010

Best Practices in Pricing

Price what youre worth. Use KISS pricing system. Account for profit, contingency & hassle-factor. Price for positioning. Monitor & adjust.
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Worst Practices in Pricing

Undervaluing your benefits. Under-estimating costs. Not considering your Platinum customers Flinch Point. Blindly following competition. Inconsistent pricing. Violating laws - DTPA
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Good & Bad Pricing Examples

1.Charging $15 per hr for professional services 2. Providing a $400 discount on a product 3. Charging $500 for one research report 4. Charging low price to get started 5.Your examples?

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Business Success Center, Austin, TX 2011

Pricing Practices Action Items

1. Make sure you have accounted for your true total costs. 2. Know the value of what you sell. 3. Ensure your pricing reflects your preferred customers value

outcome, your preferred positioning, meets legal requirements, includes profit and contingency as well as costs. For a copy of BSCs Pricing Terms & Concepts Glossary or additional questions, please email me at triplett@runitright.biz.
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Heres to your success!

Sales & Financial Management Services

Business Success Center

Jan Triplett
triplett@runitright.biz Jan Triplett Blog: http://www.ownersview.com

February 10, 2011

Business Success Center, Austin, TX 2011