Many businesses are facing an extremely tough time at the moment. During tough economic times, companies respond in a variety of ways. Many turn to cost cutting, but the effectiveness of this and the size of the opportunity is declining.

Companies need to focus on revenue and the opportunities that PRICING offers to increase profit. A 1% improvement in price results in more than a 15% improvement in profit.

How is this achieved? By pricing for VALUE.

The key here is to create and communicate a DIFFERENTIATED offering. By this I mean, creating an offering that is different to that of your competitors because it adds a unique economic benefit to your customers.

You can add more services to differentiate yourself, but if your customer does not see a benefit in their business in terms of cost reduction, revenue growth, improved asset utilisation or risk reduction, they will see no additional value and be unwilling to pay for it.

You have just increased your cost to serve and put more pressure on your profits!

What can you do?

• Develop a deep UNDERSTANDING of your target customers’ needs. Be selective about which customers / segment you want to serve because you cannot be everything to everyone. Focus on solving problems and pain points for a similar group of customers.

• Understand the economic benefits of your competitors' products and offering. CREATE an offering that is differentiated and not just different.

• COMMUNICATE the value to your customers. You must quantify the economic benefit in monetary terms to your target customers.

• Capture a share of this value in your price. Create a win win situation for both your customers and for your business.