Although pricing is one of the most powerful profitability levers for companies, many businesses pay relatively little attention to it. In this blog, I'll give you 4 important reasons to invest at least some of your marketing resources in a professional pricing strategy.
Pricing is the only marketing tool that has a direct relationship with your company's financial performance. Investments in other marketing tools such as Product, Place, Promotion or People can also lead to higher profitability, but depend on many more factors - such as pricing. Especially in situations where working capital is limited, it is therefore recommended to optimize your pricing strategy first before investing in uncertainty.
The implementation of a pricing strategy does not require allocation of scarce resources, discussions with stakeholders or large investments. In many cases it is possible to implement quick wins within a few weeks and to visualize your increased revenues within a few months. This makes pricing is also very applicable in crisis situations.
A professional pricing strategy is not based on vision or creativity, but on a careful consideration of scientifically proven economic or psychological insights. This makes the pricing optimization process more predictable and acceptable than the implementation of other marketing tools.
Last but not least, many markets have become more transparent in the last decade. The rapid growth of digital platforms, including price comparison sites, has made it much easier for buyers to discover the prices of next best alternatives. As a result, and due to technological innovations such as Artificial Intelligence (AI) and Machine Learning (ML), price pressure and dynamics within these markets have increased. These developments require for many businesses a transformation from a somewhat reactive to a more proactive pricing strategy with which you should better start today than tomorrow.