Companies are more and more exposed to a price war in competition with other firms. Consequently, it is necessary to maintain the own competitive position by preventing cannibalization through price. However, there is often a lack of an objective basis as to which price can be enforced based on your brand. What maximum price can be charged without jeopardizing your customer potential? What is the lowest price that can be offered without causing damage to your brand or your reputation? What pricing policy ultimately leads to the highest sales volume? With this in mind, a methodologically proven approach helps to determine the ideal price and derive preparatory measures in case of a price adjustment.
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The aim is to deploy the ideal price construct for your product or service. The first step is to determine the real price premium in the market as well as the perceived surcharge from the target group’s point of view. This helps to illustrate the current price level. Even more exciting is the outlook at the price potentials that can be raised in the future. Using statistically sound methods, the feasible price ceiling and floor in your market are determined and scenarios for price, conditions and sales are derived. In doing so, it is possible to conduct target group-specific analyses as well as recommendations regarding the design of rebate systems or modelling price and attribute alternatives. As a last step, comprehensive arguments and recommendations for action are compiled that enable you to enforce a planned price raise as “quietly” as possible – i.e. with the least possible negative washback effects from the market.
Base your price decisions on objective data and facts. This is simplified by the transparency gained regarding your target group’s willingness to buy and pay, but also by the calculation of the ideal price that secures or at best increases your profitability.
On top of that, your target group will consequently honour a fair price and condition system as good value for money. This, in turn, has a positive effect on winning over potential buyers and binding existing customers. As a result, you contribute to preserving your competitiveness in the market and to maintaining the success of your company (key word: “good enough”).