Pricing for profit
A pragmatic approach to improving B2B pricing
Tuesday 20 December 2011Report
Companies tend to set their prices too low in the business-to-business market. Regardless of pricing policy, some customers end up paying a price that is not justified by the amount they buy or the costs that they incur. And that is perhaps putting it mildly. As a result, you get lower margins, year after year.
Often nobody realises that customers are paying too little and, if a company does pick up on it, it usually fails to tackle the problem decisively. So how can you make sure that you’re not setting prices that your business? Most importantly, if closer examination reveals that prices are too low, how can you correct this situation without alienating customers or demotivating sales staff?
In the course of our work with clients over the last few years, we’ve developed a successful method for tackling precisely this problem. Because correcting low price has a direct impact on profits, you can often achieve a considerable improvement, in our experience from one to three percent of turnover.
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