Keys to Setting Prices

The ten fundamental points to consider when defining a company's pricing policy, and actions to take to determination them.

Wednesday, March 4, 2015

By Ariel Baños
President and founder of Fijaciondeprecios.com

1. I will use the cost discover the floor price and profitability, never to set the price.

2. When a customer questions my price, before offering a discount or letting them go, I will make sure that they understand the differential value of my proposal.

3. If my proposal does not have a differential value for the main competitors, I will think of ways to innovate to differentiate myself.

4. I will apply prices to suit every customer, without alienating anyone using segmentation tools based on value prices.

5. I will reward vendors that provide higher returns, not just volume.

6. I will analyze smart ways to communicate the price: how it is transmitted is as important as the price itself.

7. I will define clear rules to preserve profitability in the sales channel: what the suggested prices and discounts are, and will control them permanently.

8. I will analyze in advance the impact of giving a discount or doing a promotion.

9. I will compare my prices only to those competitors that target the same customer segment.

10. I will not rely only on intuition: I will use a professional methodology for setting prices (Yes it does exist!).



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In general, those who ask themselves what price they should set for their product, start from an incorrect premise: using the cost as a starting point. 

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Controlling and professionally establishing the price of what is sold is essential for a company in order to be successful and obtain an adequate return.

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How to Set Prices in 2018

December 2017

Planning adjustments to avoid the loss of profitability and redefining discount policies are some of the goals that companies should consider when deciding on their pricing strategy for the new year.

The last weeks of December are generally a good time to evaluate the results of the strategy implemented throughout the year that is ending, and to reevaluate plans for next year. Ariel Baños, a specialist in price management, recommends that companies commit to five principles in order to get the information needed to decide on plans for next year.

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