Pricing is one of the most powerful, yet underutilized strategies available to businesses. A McKinsey & Company study of the Global 1200 found that if companies increased prices by just 1% and demand remained constant, on average, operating profits would increase by 11%. Just as important, price is a key attribute that consumers consider before making a purchase.
The following pricing tips can reap higher profits, generate growth and better serve clients and consumers by providing options.
Stop marking up costs. The most common mistake in pricing involves setting prices by marking up costs. Although easy to implement, these “cost-plus” prices bear absolutely no relation to the amount consumers are willing to pay. As a result, profits are left on the table daily.