Cost-Plus Pricing Strategy – 2 Good Uses

Cost-plus pricing (adding a fixed percentage for profit on top of your costs) is the worst pricing strategy around. And it’s used by most companies(!) But… there are two good uses for it: Use it when all your products or services are completely customized. Thus if you build new houses to customer specs — thenContinue reading “Cost-Plus Pricing Strategy – 2 Good Uses”

Do you use this terrible pricing strategy?

Cost-plus pricing is where you calculate your costs, then add a percentage to it for profits. It is used by most companies. Cost-plus pricing is required only where you sell customized products/services — where every order is different. For all other products/services — it’s the worst pricing strategy you can use. In fact — youContinue reading “Do you use this terrible pricing strategy?”

Rationale for Entry-Level Offerings

A peasant may not remain one. Offering a range of models at different price levels lets consumers develop brand loyalty — before they can afford your best. Example: By ignoring the low ends of their markets, GM and Ford allowed Toyota & Honda to grow strong enough to then challenge them with high-end cars. Source:Continue reading “Rationale for Entry-Level Offerings”

Price Cuts That Don’t Increase Sales

Are you increasing sales with your price cut? Or… Just increasing your customers’ inventory? Advancing their expensive purchases by a month or two? Price cuts that don’t increase total sales can be as worthless as the promises of a known liar. Source: The Tao of Pricing.