Short-term pricing initiatives can lead to significant profit improvements.
Revenue and profit gains do not require substantial changes to your Pricing Strategy or Price Model. But, if you never assess your Pricing Strategy, you could risk losing money, what we like to refer to as revenue leakages. One way to ensure short-term profitability could be as simple as charging for services that you would normally give away for free. Usually this can be implemented within a few months and could give an increase of up to 6 percentage points.
WHAT IS A TACTICAL OPPORTUNITY?
Tactical Pricing starts with analyzing your offerings. We look at how you currently set prices and charge for your products and services and how consistent and structured you are in capturing the values that you provide. This is typically done through internal as well as external interviews and analysis of historical transactions.
This way, we can better understand at what level your Pricing Strategy is currently and move on to the next step, establishing benchmarks. At this stage we ask you to identify gaps in your pricing that can be improved quickly so that we know what areas to prioritize.
The analysis typically leads to a set of possible measures. These are quantified in terms of profit potential and complexity of implementation. Those that generate enough profit and can be implemented in less than three months qualify as tactical and will be deployed.
The potential profit improvement from identifying and implementing tactical measures vary depending on the industry and the quality of your pricing. Typically, we see profit improvements of 2 – 4 percentage points. Depending on the size of your business and your current profit, this can be a substantial profit improvement! If you are interested in assessing your Tactical Opportunities, contact us and we will evaluate the possibilities for your business!