OnDemand WTP Pricing Research

Discussion: 9 Ways Your Pricing Strategy Sucks

Why do I want to talk about pricing? There is a disease called “Price Discounting.” It is like heroin. It will kill you and your business. Let me give you an example to explain this:

You make a 40% gross margin. You decide one day to reduce your prices by 6%. That means that you now have to increase your gross sales by 50% to make the same gross profit. Now that is just insane, but that is what occurs in the market place.

Especially in time when there is fear, anxiety and sales restriction. People get gun shy. They play Russian roulette with their own business. Businesses go broke because they do not sell in their market; they do not understand the implications of pricing; they mistake turnover for profitability and they grow their sales and wonder why they are not making any money.

Top Comments

Christy Webb

Employee Benefits Specialist at Great-West Life

So many amazing points here. Number 4- The predetermined belief, and Number 5- The Apples to Apples idea really resonate with me. If we believe a price to be too expensive for a customer, then, in many cases, we will convey that through our tone, choice of wording and energy. We don’t know the customers/ clients background and therefore can’t place our own perceptions on the value of the product. The Apples to Apples comparison is toxic- We work so hard to make ourselves or our product/service stand out and then throw that all away with this thought process. This article can be applied in many ways other than pricing… Personal Branding, Mind-set, Approach to buying… Thank you!

Bill Johnson

Product Management | Program Management | P&L Management | Business Development | Strategy | Sales | Marketing | PMP

There are some very legitimate reasons here for a poor pricing strategy. As with all things, these will not apply in every single case. However, in my experience, not having or creating any differentiation will soon result in a race to the bottom for pricing.

Prabhul Sankar

Founder at Social Business Rocket & CaspiaDew IT Innovations Pvt Ltd

Very good summary of pricing. Totally agree with you on selling high margin products and services. Customers who tend to buy from you based on just how cheaply they can get it may not be the right customer you want long term. It’s best to have few high paying customers who understands your value proposition that a lot of low margin customers who always look for every opportunity to shrink your margins.

Rupert Kiefl

Q ui – Usability . Design . Technology

Not only customers get attracted who buy on price. It introduces a certain price level in the market which may not be realistic. We offer an online expert service which is below the common rates for consulting (mrnielsson.com). But our USP is speed, not price. Your are right Tony!

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9 Ways Your Pricing Strategy Sucks.

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