List Price Positioning Strategy, Value Proposition & List Price Plan ….. End-to-End Pricing: Steps 2, 3 & 4

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Step 2 – List Price Positioning Strategy

Once you’ve worked out where you are competitively, it then becomes much easier to work out where you would like to be through probably applying nothing more than common sense – deductive reasoning – which is generally a lot cheaper, quicker and more useful than any market research that could be conducted.

Good GMs, Sales VPs/Directors and Product Managers/VPs typically know where they need to be positioned: they just need a bit of help articulating it.

Also be aware that an LPPS is reactive metric (“you know, they move and then we follow them”) so it’s very easy to stumble from being a price-leader into being a price-follower without realizing it. So to avoid this, you will also need some proactive metrics in your Pricing Strategy.

The LPPS should be in a presentable format and include a brief written rationale for every element in the strategy so the purpose of the price positioning can be easily explained to management for their approval, and to Sales for development into sales tools to communicate value to customers.

Step 3 – Value Proposition

The List Price Positioning Strategy needs to be consistent with and informed by the Value Proposition at multiple business and product levels.

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The Value Prop needs to be appropriate for target market/segmentation, and implicitly captures how the business expects to create value for its customers.

There is an implication here that the Value Proposition needs to be meaningful – again, if I didn’t need to say this, I wouldn’t.

At a product level, insisting that the value proposition is:

  • quantitative – usually helps focus a product manager’s mind, or if it is
  • qualitative – include superlatives or comparatives which are independently verifiable

OK, so this section doesn’t have very many words in it. But there again, neither should your Value Prop. Succinctness and relevance are the keys to a successful Value Prop. The best one I came across was citable by the CEO. Another was developed by the CIO, not product management.

Step 4 – List Price Plan

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Now list price changes can be planned. This is where the pricer starts to apply the paint to the canvas … chips away at that stone block …. puts quill to paper.

The overall approach to & rationale for the list price changes should be documented, not only so you can remember why you did what you did, but also so Sales don’t have to work out what you intended for themselves.

 

Extract from “10 Steps to Creating End-to-End Pricing” in April 2016 edition of The Pricing Advisor, authored by Paul Charlton of The Pricing Factory®Read the paper.

  • The Pricing Advisor is the monthly publication of the Professional Pricing Society, The World’s Leading Association Dedicated to Pricing Management.
  • This is the second article of Paul’s that the Professional Pricing Society has published. Read the paper in slideshow format …..
  • Any questions, please contact paul.charlton@thepricingfactory.com

 

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