This document discusses pricing strategies and considerations for businesses. It addresses determining the right price by considering costs, competitors, and customers. Pricing directly impacts profit, which is calculated as the number of customers multiplied by the sales price. The document also discusses bundling products and services, using discounts strategically to create urgency while protecting perceived value, and evaluating pricing strategies based on goals and key metrics like sales, customer count, and profit.

1. Pricing
Strategy
A practical discussion
Kate Groom
Copyright 2016, Smart Franchise

2. What’s the right price?

3.  When did you last choose a price for a
product or service?
 What quantitative and qualitative information
did you use to make that decision?

4. Price vs. Cost
 Price
 What someone is willing to pay
 Cost
 What it costs you to make it
 Profit
 The difference between the two

5. Price: The most important
business decision you will make?
Profit (or loss) boils down to:
Number of Customers x Sales Price

6. The impact of price changes
 What impact would a 10% price increase
have on profit in your business, assuming you
did not lose sales?
 What impact would a 10% unit sales increase
have on profit, assuming your price were 10%
less?
Number of Customers x Sales Price

7. Pricing Perfection
1. Leave no money on the table
2. Maximise unit sales
3. Aligns with perception of value

8. Pricing strategies
Price
Costs
Competitors
Customers

9. The benefits of bundling

10.  What bundling does your business employ
today?
 What customised pre-set bundles could your
business consider?

11. Discounting

12. Healthy discounting
 Create a compelling reason to buy
 Urgency
 Promise of value

13. But …

14. Some warnings!
 Don’t offer discounts for long periods
 Vary your offers
 Guard your value

15.  What is one example of your business offering
promotional discounts? (Cost & Gain?)
 Name 3 ways your business could generate
urgency by using discount-based offers

16. Is my strategy working?
 What are your goals?
 What are your key measures?
 Sales ($ and/or volume)
 Customer count
 Profit

17. Thank You!
 kate.groom@smartfranchise.com.au
 LinkedIn
 Facebook/Weekly Business Tips