What’s your strategy?
January 2012
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Speaker Notes
January 2011
| The Pricing Puzzle
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Did you know…
Source: McKinsey & Company Impact study of 2,400 companies
January 2011
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Puzzled?
How do you put the pieces together?
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Puzzle Pieces
The six strategies for pricing
• Competition Based
• Loss Leader
• Penetration Strategy
• Premium/High End
• Cost-plus
• Predatory
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Competition Based
Striving to meet and or beat the prices your competitor is charging.
A competition based pricing strategy focuses solely on what the competition is charging. It is:
•challenging for a small business to maintain
•provides very narrow profit margins.
Think of this strategy as rock-bottom pricing.
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Loss Leader
Give it away to get more in the future
Historically, printers have done “pro-bono work” to win customers. Make sure you look at the entire picture, before aligning yourself with a freebie client. Remember all of your competition has been asked to do the work for free also.
January 2011
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Penetration Strategy
Increasing the value to your customers, build loyalty and enter the market.
Unless you are “blood brothers” with your customers, loyalty in the our business is a very difficult thing capture.
Offering value-added services can help secure the relationship and build your brand loyalty – storefronts, fulfillment, promotional premiums or database management.
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Premium – High End
Exceptional reputation, quality, and distinction. In order for you to implement this type of pricing strategy, you must have built your brand recognition to a high end, premium level.
Image courtesy of Rosebrook Meyer
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“Cost plus” strategy: Full cost and Direct cost
Two types of “cost plus” pricing:
Full cost pricing includes both variable and fixed costs and adds a % markup.
Direct cost pricing uses the variable costs plus a % markup. Usually only used when competition is high as it usually leads to a loss over time.
Fixed costs
• Equipment Leases
• Your building
Variable
• Paper
• Toner/ElectroInk
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Predatory
A carnivorous cousin, Deinonychus, about the size of a man, leaped on its prey, wrapped its long arms and three-fingered hands around it, and kicked it to the death with sickleshaped toenails.
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Market
Environment
Differentiate
Competition
Demand Income
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What is the important piece?
A puzzle is not complete without all the parts. Be systematic and strategic in your decisions.
Do not set the pricing and then just forget it. All pricing strategies can make sense one time or another
(except predatory!), but none alone are always sufficient.
Your goal must be to stay one step ahead of your competition.
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Market Strategy:
No, not this type!
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We can help…
Visit: www.MohawkMakeReady.com
to browse content, request a meeting, or join the community.
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