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How do retailers price their products?

November 30, 2018 in Q&A

In my experience retailers have rather simple pricing methodologies and most of them use variants of cost+ (cost+ = taking your cost and adding a standard margin based on group/category). They manage their pricing in Excel or have built in the pricing calculation into their ERP. Few of them actually uses a price optimization tool, though it’s increasing in popularity in the last few years, especially with the growing competition from online retailers.

To dig deeper, I think a first good step is dividing the retailers into two major sub-groups: own brand sellers (H&M, IKEA, J Crew, Zara) and re-sellers (Media Markt, Bauhaus, Wall-Mart, Home-depot, Carrefour).

retail pricing priceedge

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How to use willingness-to-pay in pricing?

September 20, 2018 in Blog

Willingness to pay is the maximum amount a customer is willing to spend on a product or service. Being aware of your customers willingness-to-pay can be the key to a successful price strategy. We will focus here on using willingness to pay in a B2B context.

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Why You Need to Start with Your Pricing Objectives

May 15, 2018 in Blog

Learn here why pricing objectives are important, and what type of objectives are most relevant in today’s market.

Creating a pricing strategy is never an easy task. For both B2B and B2C markets, first be clear on what is your pricing “destination”. That should translate into clear, measurable business objectives. Think in terms of: “increase market share by 10%” or “increase customer satisfaction by 20%. Sync the pricing destination with the overall business objectives of the company as pricing objectives need to work towards the business’s plans for the future. Of course, depending on the specific needs of your company, you can have multiple objectives or even change them along the way.

When choosing your pricing objectives, keep in mind that pricing is intertwined with the financial, sales, and marketing departments. Hence, your pricing objectives should relate to all 3 of these key aspects:
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How to get started with dynamic pricing

March 28, 2018 in Blog

What happened lately that made dynamic pricing such a priority? Well, the answer is easy. It’s been Amazon.

We must recognize Amazon as the driving force behind dynamic pricing. Their adaptability to a vast and diverse inventory has set a benchmark for competitors to follow in their footsteps.

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How to Overcome 5 Common Blockers for Better B2B Pricing

March 28, 2018 in Blog

Analysis has shown that a 1% increase in realized price brings an 8% improvement in operating profit, whilst a 1% improvement in market share or variable costs brings about only 4%. This makes it clear that the beliefs against changes in pricing should be overcome, else money is left on the table and the door is open for competitors who understand the power of pricing.

 

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