5 Steps for A Strong Pricing Strategy

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5 Steps for a Strong Pricing Strategy

In the world of revenue management, offering great discounts is often the go-to solution for boosting profits. However, it doesn’t go much further than increasing your short-term sales. In the long-term, the downsides of routine discounting outweigh its benefits, making a dent in your credibility, top-line revenue, and business growth plan.

For a pricing and channel management strategy to be truly effective, revenue managers need to look beyond the easy gratification and set their sights on making more profit through premium sales, instead.

All of the most successful pricing strategies in supply chain management have one thing in common – they don’t rely on promotions. Instead, they focus on the customer and addressing their pain points, using buyer-driven pricing as a key tool in their revenue management arsenal.

To create a strong pricing and channel management strategy which has the potential to help your business grow, you need an easy and efficient way to make pricing data work for you. Let’s examine some of the key aspects that make up a strong pricing strategy:

1.      Get a detailed view of your customers

The first step to having an effective pricing and channel management strategy is making sure you know your customer base. Once you have a clear idea of what USPs attract them to your product and how much they are willing to pay for it, you can start creating a cohesive pricing strategy that monetizes your value proposition.

Remember also, that not everyone’s needs are the same, and your pricing strategy should reflect that. In the effort of accomplishing the most efficient pricing strategy, customer segmentation is your friend. Data on historic purchases and consumer behavior can help you identify unique audience groups, which you can target with more personalized pricing to drive profit.

Tracking the way your customers respond to changes in pricing should also be part of all great pricing strategies in supply chain management. This knowledge would help you tweak your approach and make your revenue management even more of a success.

2.      Clarify your value proposition

Knowing your customer goes hand in hand with knowing your offering. What makes your product or service the bee’s knees? In addition to being genuinely good practice, knowing the USPs of your product will aid you in justifying the prices you set.

This aspect of your pricing and channel management strategy requires an in-depth understanding of the costs involved at each stage of your supply chain, including shifting margins and long-term profit growth.

Armed with this knowledge, you’d be in the position to outline the best pricing strategies in supply chain management and to work alongside both the marketing and the sales team to implement these pricing strategies.

Once you have a pricing and channel management strategy in place, observe how your customers react to it. An increase in rates over the weekend period, for instance, may go unchallenged by your target audience, thanks to their willingness to pay more for the convenience of making a purchase during their downtime. Such findings are crucial for the next stage of planning, during which you’ll perfect your pricing strategy further.

3.      Commit to continuous improvement

Your pricing strategy does not exist in a silo – it’s closely tied to your Research & Development efforts. After all, what better way to ensure you can maintain premium rates and make a profit than investing in innovation?

Collaborating with your product strategy team, you can work to identify areas of your offering customers would like to see improved. By being proactive and building up the value of your products or services, your company remains competitive in a fast-paced retail environment, which in turn enables you to optimize your pricing and channel management strategy.

4.      Focus on profitability over the number of sales

Going back to the pitfall of discounts, a pricing strategy relying heavily on offering discounted rates robs your business of the opportunity to make premium sales, and therefore increase profits. Instead of getting trigger-happy with special offers, consider including a ‘quid pro quo’ discount policy in your pricing and channel management strategy.

What can you get in return for offering your customers lower rates? Case studies and testimonials, for instance, are great for building brand awareness. But you could also go down the route of financial benefits, such as long-term contracts or larger upfront payment sums. All these are important factors to include in your pricing strategy.

5.      Integrate pricing management technology

All great pricing strategies in supply chain management need the latest pricing management technology to succeed. The right solution enables revenue managers to process customer data quicker and easier, harnessing the power of pricing analytics to increase the efficiency of their pricing strategy.

The benefits of incorporating technology into your pricing and channel management strategy are endless. Actionable insights based on purchasing data and predictive pricing automation models are just some of the powerful pricing strategy tools designed to help make your business more profitable.

Get started with our Pricing Strategies Toolkit

You know what you should do, now let’s execute. Register for our live demo to see Rockton Pricing Management in action and discover scalable ways to boost your revenue.

Ready to hit the ground running? Download our pricing strategies checklist and get up to speed on effective pricing management. Still have questions? Send us a note and let’s chat!

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