Oct 20, 2021
To be a pricing leader, you must be a value-based business.
Welcome to the Impact Pricing Memecast, where I take one of our daily memes and provide a little bit more insight behind the word.
In general, a company is either a pricing leader or a pricing follower. A pricing leader is someone who looks at the steady-state of pricing and says, we're going to change our prices first.
“If you want to be a pricing leader, you really need to be focused on value, not on cost plus.” - Mark Stiving
And typically the rest of the market is going to follow that pricing leader. However, if you want to be a pricing leader, you really need to be focused on value, not on cost plus.
Especially not on competitive pricing. Once you, as a company can focus on value, you have the ability to see that the market is willing to pay more than what you are currently charging.
You have the ability to see that your products are highly differentiated from your competitors or that you've got very loyal customers who are going to stay with you. Even if you raise prices above where they are relative to your competition.
When you adopt this concept of truly understanding how customers perceive value, then you have this ability to say, we're going to lead the price change because even if nobody ever follows, we're going to be better off.
We understand the way our buyers are making decisions. But the great news is if you're a pricing leader and you choose to increase prices because you know, you can get away. The odds are really good.
Your competition is going to follow anyway, which simply raises industry profits, which also means your profits.
So if you want to be a pricing leader, you need to be focused on value.
We hope you enjoyed this podcast. If you see have any questions or feedback please email me mark@impactpricing.com.
Now go make an impact.
Connect with Mark Stiving:
- Email: mark@impactpricing.com