Home > Business > What is Your Plan to Ensure the Price is Right?

What is Your Plan to Ensure the Price is Right?

August 20, 2009

Paul Hassing was today agonising over pricing – one of the most important decisions a business must make. He gives some simple, real life situations and then asks some very simple, yet thought provoking questions.

I’ve commented, and some of the other comments are interesting also.

I have often been surprised at the haphazard manner in which many small businesses treat their pricing. Often there is little or no research, it is reactive, and there is rarely a plan. Without a plan the pricing decision is a one-off event rather than a process, and this means it will always be reactive.

Pricing is often considered part of the “marketing mix“, and this makes sense. But having a plan for developing your pricing can greatly help in the financial management side of your business also. In a very basic sense, a pricing plan answers questions like “What is the price now, and where do I want it to be?”, “Why is the price what it is now?”, and “What do I have to do to increase/decrease my pricing?”. Of course, you’ll also want to try to determine how your clients will react, and what they will expect as a result of any change.

By having a plan, you can do things like developing strategies to tie in customers payment performance. This would seek to improve profitability and also cash-flow. Of course, this needs input from both the marketing and financial types in your business.

This is all kind of obvious when you think about it, but without a plan to develop all aspects of your business, including pricing, you’re always going to be reacting to what other people – clients, competitors etc – are doing, rather than getting to where you need to be.

So, have you got a Plan?

Now playing: Pink Floyd – Money
via FoxyTunes

Categories: Business Tags: ,
  1. August 27, 2009 at 7:55 am

    Thank you for your kind mention of my blog post, and for leaving such useful comments on it. You really added depth to the debate – there and here. Best regards, Paul. 🙂

  2. August 27, 2009 at 8:14 am

    Awww, shucks Paul. I appreciate your kind comments, and I’m glad you could drop by.

    I’d love to know Paul, how do you go about using the feedback you receive from your blog posts, such as the one I’ve mentioned above? Do you absorb the better suggestions, mull them over and come up with something of a combination of the ideas preseted and your own ideas? Or are there times when one specific comment nails it exactly, and you have your answer?

    I’m fascinated by the way this kind of feedback is generated and used. You have some commenters giving some really great feedback, which is a testament to the quality of the site in general, and the writing specifically.

  3. August 27, 2009 at 9:44 am

    I’m always grateful for and humbled by the feedback I receive. If it’s relevant to my situation, I use it, however, I’m sometimes delayed by time, pride and inertia.

    For instance, I KNOW I must learn my accounting software. But I hate it so much that I still haven’t followed all that goood advice.

    Still, I note all feedback and (at least plan to) return to it as soon as I can. Thank you once again for your very encouraging words!

  4. August 27, 2009 at 6:15 pm

    Thanks Paul!

    “…time, pride and inertia.”

    I feel your pain, brother!

  1. No trackbacks yet.
Comments are closed.
%d bloggers like this: