The different pricing strategies
Let's be clear: no price strategy is to be thrown away.
Some are just much more suited to your challenges, and will allow you
maximize your short-term profits.
Our consultants have master them all, and will be able to
guide you to what makes the most sense for your business, knowing that different strategies can be linked.
We have summarized them on this page and defined them below.
Cost Based Pricing
As the name suggests, the idea here is to apply a given markup rate to your cost structure to set the selling price. Praised by many young entrepreneurs in order to guarantee immediate profitability in a simple way, its main pitfall is that it does not ask the question of the value perceived by the customer. It requires a fine and detailed knowledge of production costs, which on the other hand constitutes an excellent step before looking at more elaborate pricing strategies.
Benchmark Based Pricing
This strategy is based on optimal clarity of the prices practiced on the market, and consists of linking the pricing policy to one or more competitors. Depending on the desired positioning, we can then choose to align with the market, or to apply a mark-up upwards or downwards. Easy to set up in medium-sized businesses, it however becomes much more accurate and relevant with the use of a dedicated Pricing tool. It also requires special attention to avoid starting a price war and devaluing your brand!
Value Based Pricing
Often described as the right approach in Pricing, it aims to assess the value perceived by customers in order to calibrate the selling price. It is appropriate in many cases, regardless of the size of the company and its market. A specific work of segmentation of the offer (products and/or services) is then necessary in order to identify all the attributes of value and differentiation versus the market.
Target Based Pricing
This involves opting for the most appropriate price positioning in order to target a specific objective (maximization of profit, volumes, etc.). This strategy requires looking into price elasticity phenomena (correlation of price variation with demand variation), and is particularly suited to companies that have a large amount of transactional and traffic data. It is therefore much more oriented towards companies with a B2C activity.
