Pricing

6. Checking Your Prices

Review your prices regularly to ensure that they are optimal.

6.1 Keep up to date with the market.

• What is the competition doing?
• How are customers' perceptions of the value of your product and competing products changing?

6.2 Turnover and changes in turnover may indicate a pricing problem or opportunity.

• Products with high or growing market share may present an opportunity to increase prices.
• If you pitch or tender for business, too high a success rate suggests that you are underpricing.
• If both margins and market share are low, you need to change something - or discontinue the product.

6.3 Limited trials of price changes can provide valuable information at reduced risk.

For example:

• Changing the price for a sub-sector of your market.
• Introducing a new product at the new price while continuing to offer the old product.

6.4 Analyse the effectiveness of any pricing tactics you use.

• Are you achieving your aims? For example, increasing sales to target market segments.
• Are there signs of unwanted side effects?
• What is the overall effect on profits?