The Pricing Strategy Audit
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This detailed self-assessment audit can be used: • to measure and improve the effectiveness of your present pricing strategy • or to create a sound pricing strategy where none exists. First, use the audit to understand the 5 factors to consider when setting prices - and how to balance them. Then get clear answers to questions like these: • Does your pricing strategy support broader corporate objectives? • Have you fully understood the influence of price on your customers? • Do you use price correctly as an indicator of product/service quality? • Do you use reference prices and diff...
This detailed self-assessment audit can be used: • to measure and improve the effectiveness of your present pricing strategy • or to create a sound pricing strategy where none exists. First, use the audit to understand the 5 factors to consider when setting prices - and how to balance them. Then get clear answers to questions like these: • Does your pricing strategy support broader corporate objectives? • Have you fully understood the influence of price on your customers? • Do you use price correctly as an indicator of product/service quality? • Do you use reference prices and differential prices effectively? • How well do you use breakeven and profit analysis? • Do you use appropriate pricing strategies at different stages in the product/service life cycle? • How do you use promotions and discounting? • Have you considered the legal issues? The audit doubles as a complete introduction to the whole question of how to set prices and calculate the consequences of your pricing decisions. The audit's 7 steps are: Step 1: Assess the Consistency Between Corporate and Pricing Objectives Step 2: Assess the Relevant Economics for the Pricing Strategy Step 3: Determine How Your Buyers Perceive Prices Step 4: Determine the Relevant Costs for the Pricing Strategy Step 5: Determine the Characteristics of each Specific Price Decision Step 6: Integrate Specific Price Decisions into an Overall Pricing Strategy Step 7: Assess the Administrative Structure for Managing the Pricing Function.
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