Smartpricing 121026085016-phpapp02
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    Smartpricing 121026085016-phpapp02 Smartpricing 121026085016-phpapp02 Presentation Transcript

    • Smart Pricing
    • Farmer’s Harvest Till Plant Weed Harvest
    • Harvest Time!
    • Farmer’s Harvest Till Plant Weed Harvest Business Cycle Develop Create Market Sell
    • The 4 Levers- 1% better
    • The 4 Levers- 1% better 2.45% Increased Profits
    • The 4 Levers- 1% better 3.28% Increased Profits
    • The 4 Levers- 1% better 6.52% Increased Profits
    • The 4 Levers- 1% better 10.29% Increased Profits
    • A 1% difference.. increased profit 12 10 8 6 4 2 0 Fixed Cost Sales Quantity Variable Costs Price
    • The 3 Simple Pricing Models • Cost Plus • Competition Based or “Strategic” Pricing • Consumer based pricing
    • Cost Plus My Costs + 25%
    • ‘Strategic’ Pricing What is my competition charging for a similar item?
    • Consumer Pricing “What can I gouge this sucker Customer for?”
    • Which Model are you using?
    • Why the traditional models fail
    • Cost Plus • No incentive for Efficiency gains • Price Floor • Leaving money on the table
    • Strategic • Who’s saying that the competition is pricing right? • Moves your product to commodity • Southwest vs Delta.
    • Consumer Based • Negotiation skills reign • Bad Blood • Biased based
    • Pay as you wish
    • 4 Price Points for “Fries with that?”
    • Razors & Video Games
    • Price Wars
    • What Did Walmart do to win the retail game?
    • Think Small 98% of their skus sell less than 20 copies per year
    • Think Small 1 Billion downloads @ $0.33 each = $330,000,000
    • Think Small 1 Billion downloads @ $0.33 each = $330,000,000
    • Subscription Model Fresh Videos, on demand
    • Subscription Model Fresh Fruits, every month
    • Snob Premium Which sold (nearly 4x) better: A Chinese silk scarf for $200-300 or A French silk scarf for $2000-3000 Same silk, similar designs, same manufacturer
    • Snob Premium WHY?!?
    • Pay if it works Pay only if it works model. No results, no pay.
    • So what’s the right way to price?