HOW TO USE AN OPTIMAL PRICING MODEL TO COPE WITH INFLATION

Inflation is the number 1 worry of consumers globally. That implies that as a business owner, now that you are getting ready for the next quarter, inflation should be a major issue as well.Cost-plus markup pricing is not a winning strategy in the current economic situation caused by inflation. If you believe that you can simply ride out the growing consumer price index, then you have not learned anything from the businesses that were unable to make a change in response to the pandemic.

What is the most effective pricing strategy for your goods or services?

Value-based pricing is charging what clients are prepared to pay. Luxury products companies make their money in this sector.

Pricing that is dependent on how much something is used or how many users a service has is known as usage-based or user-based pricing.

As they became increasingly adept at processing larger amounts of data and luring more users per firm, several SaaS companies shifted to this pricing model.

While flat-fee or hourly, billing for completed projects or work performed by the hour. is the model of choice for many freelancers, consultants, and contractors.

However, choosing the best model is only the first step.

Let us see how to include all three in a pricing strategy:

1. Adding value

At just about every price range, you can get a car with features like all-wheel drive, heated leather seats, digital assistant phone docks, and fuel-efficient engines. The best products and services are frequently the best in their respective industries. Your most value-conscious clients will take their business elsewhere rather than join you in a race to the bottom if you try to save corners by using a flimsier grade of plastic or a cookie-cutter design.

2. Calculate value.

Your pricing strategy should not merely be determined by current market conditions or prices charged by your competitors. The value your product or service provides to your clients must also be taken into account (quantified), improve results, and entails prototyping, testing, and retesting. The only way to achieve the ideal balance between meeting a need and making a steady profit is to know your product or service, as well as your clients, inside and out. To successfully express the value your product or service provides, quantify it.

3. Communicate the value.

Influence the perception of your consumers, create a good description of your products, have a unique selling point, and last but not least the brand. Packaging, product performance, and shelf or online placement are all included in value communication.

Your clients are the ones who ultimately decide how much your good or service is genuinely worth.

Whatever pricing strategy you decide on must consider all three components of the value equation in order for your business to continue making money, expanding, and WIN the fight against inflation.

-July 20, 2022-