Marketing Consulting Firms Essex Junction VT

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Marketing Partners, Inc.
(802) 864-6710
176 Battery St
Burlington, VT
 
Sustainable Insights
(802) 482-3500
208 Orchard Commons Road
Hinesburg, VT
 
Brandthropology, Inc.
(802) 862-2400
266 Pine Street
Burlington, VT
 
Paul Kaza Associates
(802) 863-5956
1233 Shelburne Road, C-3
So. Burlington, VT
 
Rac Marketing Services
(802) 862-0006
1233 Shelburne Rd
South Burlington, VT
 
Asgood & Better
(802) 735-5527
78 Drew Street
Burlington, VT
 
Direc-Tel Marketing Solutions
(802) 288-9268
700 Osgood Hill Rd
Essex Junction, VT
 
Starr Jewell Marketing Services
(802) 863-7997
55 Bartlett Bay Road
South Burlington, VT
 
Sage Marketing Group
(802) 862-0623
4049 Williston Rd
South Burlington, VT
 
Shark Communications
(802) 658-5440
209 Battery st
Burlington, VT
 

The Top 10 Common Pricing Mistakes Most Companies Make

Price strategy is emerging as the most important resource for companies to increase their competitive advantage. The vast majority of companies have spent years achieving gains through cost cutting, outsourcing, process re-engineering and the adoption of innovative technologies. However, the incremental benefits from these important activities are diminishing, and companies need to look at other areas to improve their business results.

Today, companies are looking to serve well-defined market segments with specialized products, messages, product variants and services, and to earn superior profit margins while doing so. Savvy companies are implementing price optimization schemes and focusing on building their organization to serve their most profitable customers. Many are even “firing” customers who are unprofitable. All too many companies, however, use simplistic pricing processes and cannot even identify their most profitable customers or customer segments. This lack of information means that all too many management teams have their sales staff focusing the bulk of their time servicing the least profitable of their customers.

Some companies even embrace policies and pricing strategies that drive away their best customers, and then they wonder why their profits are not growing. In the course of our engagements, we have seen examples of good and bad pricing policies. The following is a list of ten of the most common mistakes companies make when pricing their products and services.

Mistake #1 : Companies base their prices on their costs, not their customers’ perceptions of value.
Prices based on costs invariably lead to one of the following two scenarios: (1) if the price is higher than the customers’ perceived value the cost of sales goes up, discounting increases, sales cycles are prolonged and profits suffer; (2) if the price is lower than the customers’ perceived value, sales are brisk, but companies are leaving money on the table, and therefore are not maximizing their profit.

Costs are only relevant in the pricing process because they establish a lower boundary for the price. In certain circumstances, there are strategic reasons a company may decide to sell a product below its cost for a period of time, or to a certain market segment as a “loss leader.” However, when a price is set according to the perceived value of the product or service, sales are brisk, and profits are maximized.

One Atenga client manufactures audio components. Across their product line, they set prices according to a multiple of the parts cost. When the market for high-end audio components boomed, the company did well enough. But as competition began to increase, sales stagnated and profits evaporated. Our research showed that particular products were perceived by certain segments of the marketplace as “priced too low.” Repricing of those products created e...

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