The document discusses pricing strategies and factors that affect pricing. It provides an agenda for a workshop on pricing, outlines learning objectives about the role of price in marketing. It discusses how perceived benefits and costs impact price, and lists factors that influence pricing decisions like competition, supply and demand, customer expectations. Graphs and examples show how pricing impacts sales revenue and profits. The document concludes with suggestions to review benefits and prices to identify price increase opportunities.

1. Copyright ©Nick Bettes Consulting www.nickbettes.co.uk
Marketing
Pricing

2. Copyright ©Nick Bettes Consulting www.nickbettes.co.uk
Agenda
• Business Surgery
• Workshop
– Pricing
• Action planning

3. Copyright ©Nick Bettes Consulting www.nickbettes.co.uk
Workshop Context
MARKETING SALES OPERATIONS MONEY
SYSTEMISATION AND RESILIENCE
BUSINESS PLANNING
VALUE
BUSINESS DIRECTION
PEOPLE

4. Copyright ©Nick Bettes Consulting www.nickbettes.co.uk
Learning Objectives
• To explain the role of price in marketing
• To understand the factors that affect price

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Benefits and Price
• The reasons customers leave
– Death or moving away:
– The influence of friends or relations:
– Competitor marketing & offers:
– Dissatisfaction with product or price:
– Perceived indifference of supplier:
4%
5%
9%
14%
68%
Source: “Lessons From The Field” Feiertag & Hogan

6. Copyright ©Nick Bettes Consulting www.nickbettes.co.uk
Benefits and Price
Source: “RightNow Technologies
Price Service
Suppliers think
customers leave
because of:
48% 21%
Customers actually
leave because of:
25% 73%

7. Copyright ©Nick Bettes Consulting www.nickbettes.co.uk
Benefits and Price
CORE
PRODUCT
ADDITIONAL
BENEFITS
INTANGIBLE
BENEFITS
A new stove
We’ll deliver and
install it
You can take out an
additional warranty

8. Copyright ©Nick Bettes Consulting www.nickbettes.co.uk
Benefits and Cost
CORE
PRODUCT
My costs
Lower
Customer
value
Higher
Lower
Higher

9. Copyright ©Nick Bettes Consulting www.nickbettes.co.uk
Pricing Factors
• What factors affect the price you can charge?
– The degree of competition, choice and transparency
– The balance between supply and demand
– The power of customers
– Market price and customer expectations
– Your direct costs
– Reason for purchase
• Desire, need or compulsion? Urgency
– Customer switching costs (lock-in) or what they forgo
by choosing someone else (USP)
– Risk, brand or reputation

10. Copyright ©Nick Bettes Consulting www.nickbettes.co.uk
Pricing
• Why is pricing important?
Unit price £10 £11 £9.50
Units sold 10,000 10,000 10,000
Sales revenue £100,000 £110,000 £95,000
Direct costs £90,000 £90,000 £90,000
Gross margin £10,000 £20,000 £5,000
Units for same gross
margin
5,000 20,000
Sales revenue £55,000 £190,000
Direct costs £45,000 £180,000
Gross margin £10,000 £10,000

11. Copyright ©Nick Bettes Consulting www.nickbettes.co.uk
Price Curve
£0
£50
£100
£150
£200
£250
£300
£350
£400
£450
£500
0
10
20
30
40
50
60
70
£10 £12 £14 £16 £18 £20
Grossmargin
Demand(unitssold)
Unit price

12. Copyright ©Nick Bettes Consulting www.nickbettes.co.uk
Implementation in Your Business
• Suggestions
– Review your mix of benefits and prices to identify
price increase opportunities