Marketing Consulting Firms Hilo HI

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West Hawaii Today
(808) 935-9131
237 Keawe St Ste A
Hilo, HI
 
Hawaii Islandjournal
(808) 961-1202
116 Kamehameha Ave Ste 3
Hilo, HI
 
Integrity Graphics
(808) 934-8614
116 Hualalai St Ste 202
Hilo, HI
 
Kpua 670 Am News-Sports
(808) 935-5461
1145 Kilauea Ave
Hilo, HI
 
Advantage Ads
(808) 935-2237
80 Pauahi St Ste 208
Hilo, HI
 
Grafix Advertising Agency
(808) 959-0200
PO Box 4085
Hilo, HI
 
Kilauea Webworks
(808) 969-6878
260 Kamehameha Ave Ste 207
Hilo, HI
 
Kkbg Fm
(808) 935-5524
913 Kanoelehua Ave
Hilo, HI
 
Hawaii Tribune Herald
(808) 935-6621
355 Kinoole St
Hilo, HI
 
3 2 1 Connect Incorporated
(808) 935-5200
121 Banyan Dr
Hilo, HI
 

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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Babcox Media • www.babcox.com
3550 Embassy Parkway
Akron, OH 44333
330-670-1234 • (FAX) 330-670-0874