PriceGains approach is basically this: Stop looking at pricing from the inside out. Figure out what your customers value the most and set prices accordingly.
Its easily said, but difficult to do without the necessary experience and background. Our experience with very large, mature companies shows that we can add substantial value in terms of changing a firms basic approach to pricing capital goods.
Sell faster with less discounting.
PriceGain has done extensive price optimization and pricing strategy development for producers of capital goods in a variety of B2B markets including electronics, heavy equipment and software. We typically focus on three things in these projects:
- Price according to perceived value
- Lower the barrier of entry for new customers
- Improve profits
In general, we can say that cost plus pricing dominates the capital goods market. Customers are well prepared for price negotiations and play competitors off each other. This leads to protracted negotiation processes that lead to excessive discounting, which in turn hurts margins.
Too much of the wrong information can hurt your profits.
One of the most common issues facing capital goods manufacturers is that salespeople often bargain with themselves. Typically, the more your salespeople know about your costs, the less money the company makes.
What happens is that salespeople bargain with themselves to set a price (or decide on a discount) before even talking to the customer. This is often a result of providing access to too much cost information and too little information about the customers needs and willingness to pay.
Go from “Inside Out” to “Outside In” pricing.
PriceGain helps companies define and price their core offerings, as well as optional products and/or services. This strategic approach allows our clients to offer its customers a competitive entry level price and forces customers to bargain with themselves on the options. A typical PriceGain project will help the client achieve optimal profitability through a combination of price cuts and price increases for core offerings and/or options. The results are:
- Overall profitability of the product line goes up
- The client is able to compete more effectively
- Negotiations take less time