PivotalPM Pricing for Sales Execs
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Discussion background for a conversation between Product Management and Sales
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PivotalPM Pricing for Sales Execs
- 2. Your approach to pricing: strategic or tactical? The Pricing Program Internal Inputs: External Inputs: Pricing Objectives Customer Demand Overall Company Objectives & Strategies Pricing Strategy Competitor Actions Production and Deliver Costs Pricing Structure Legal Constraints Pricing Levels/Tactics © Pivotal Product Management LLC www.pivotalpm.com 2
- 3. What’s your key concern when pricing? Cost Determine desired gross margin and profit margin Market Check competitors Check customers – price sensitivity studies Value Based on customer perception of value Use industry or customer metrics to quantify savings and/or increased revenue © Pivotal Product Management LLC www.pivotalpm.com 3
- 4. What’s your pricing strategy? Skimming Neutral Penetration © Pivotal Product Management LLC www.pivotalpm.com 4
- 5. Pricing’s Role in Positioning Price Promotion Product Place © Pivotal Product Management LLC www.pivotalpm.com 5
- 6. How do you uncover value? “Pricing With Confidence” - Holden, Burton © Pivotal Product Management LLC www.pivotalpm.com 6
- 7. To Change the Price, Change the Value Price Increases Bundle Add features (value) Add options Price Decreases Unbundle Remove features Make components optional © Pivotal Product Management LLC www.pivotalpm.com 7 Design flexibility into the product
- 8. More Critical Pricing Questions Who is involved in pricing in your organization? Can every sales person explain all of the value in your offerings? Have you lowered your prices because of the economy? With or without changes in the product/service? What happens to profits? What’s your discounting policy? How often do you need to discount to close deals? What happens to profits? Are sales staff compensated on revenue or profit? © Pivotal Product Management LLC www.pivotalpm.com 8
- 9. My Favorite Pricing Resource Pricing with Confidence 10 Ways to Stop Leaving Money on the Table Reed Holden and Mark Burton www.holdenadvisors.com – sign up for the newsletter! © Pivotal Product Management LLC www.pivotalpm.com 9
- 10. Pivotal Product Management We deliver product managementskills assessment, training, consulting and coaching for greater product success. Linda Merrick, CPM, ACPM Mara Krieps, CPM, ACPM lindam@pivotalpm.com 10
Notas do Editor
- There are 3 main pricing strategies, and you can create variations.[describe each] Go to neutral when you can’t use either skimming or penetration.Transition: the next perspective we want to look at is what I call “pricing drivers”.
- Price is one of the 4Ps (anyone unfamiliar with that concept?)In marketing, we generally choose our positioning on one of the 4 – usually product features. We overlook the other possibilities.The price we choose – low or high – makes a statement and that statement has to be considered as part of the overall brand and value proposition.Transition: let’s look at pricing strategy next.
- Here’s a great way to figure it out for a B2B offering; you could structure a similar drill-down for B2C but including emotional value. This is best done directly with existing customers in an interview setting.1.First, understand how the customer’s business makes money – what’s their business model?2. Then, get specific about how the department you’re selling to plays a role in the business operations – are they a cost center or a revenue center?3. Drill down again to the specific processes used in that department that your solution impacts and what role your solution plays – hopefully it’s a major role!4. Then ask about the impact of your offering – what results are they expecting, and how will they measure them?Now you have the heart of what we call ‘value proposition’. The next two steps set you up for competitive positioning.You drill down into the criteria the customer used to compare solutions (not necessarily competitors!). Then you ask them to compare your solution to the next best solution and point out strengths and weaknesses. Transition: When you understand and can quantify VALUE, price becomes a lot clearer. The last challenge, however, is to put price in the larger context of economic conditions.
- Addressing economic conditions demands flexibility from every company, but the flexibility has to happen on two fronts: pricing, and – more importantly - the product offering itself.Keep the relationship between price and value pretty steady! Transition: What other questions have we not addressed? Here are some that I run into regularly with clients.