Successful organizations and acomplished leaders have two things in common: excellent strategies and superior execution of those strategies. They know how essential these are to superior performance.
I have developed strategy-based plans for countless businesses and professionals; and Sun Tzu’s The Art of War and my own “10 Laws of Success” are the platforms to be used to achieve successful planning and execution.
In business, pricing is the value that your customer pays for your product and service. If the customer’s perceived value of your product or service is greater than the product’s real value, the customer will always pay up to the point that the price equals his/hers perceived value. Do you have the optimal pricing strategy?
The following equation should be helpful in understanding this concept:
Value = Product or Service Benefit (Quality) / Price
As you may observe from the equation, value is what you get versus what you pay. Therefore, in order to keep the perceived value high, the actual value of your product and service must remain high in the customer’s mind.
How is this done? By positioning your brand, product or service at parity price or five to ten percent higher vs. your competition; while making sure the customer feels a positive emotional connection to your brand, product or service. Once you achieve that, you may price your product as high as your consumer target feels is reasonable to pay.
If your organization does not have a pricing strategy to consistently achieve superior customer value, stop everything you are doing right now and create one. Make it your number-one priority. The future of your business depends on it.