Pricing Profitably in the Face of Competition

Pricing is one of the most powerful ways to improve – or destroy – profits. This course can help you improve the pricing practices at your company or allow you to help your clients make better pricing decisions.

Many companies feel immense pressure to reduce prices because of the prices of their competitors. This might have costs few have considered. It could devastate long-term profits. Worse yet, it could lead to a price war. 

I'll start by explaining the premise and assumptions of competition-driven pricing. I'll define price cannibalization and show how to calculate its cost. A company must be very careful before starting or continuing a price war. I'll explain how to prevent one.

There are three common pricing strategies. You'll learn them and when each may be useful. 

Finally, we'll tackle discounting. A good discounting process will improve customer satisfaction and employee morale. Repeatedly buckling under pressure to give discounts trains customers to press harder and harder for discounts. A company may think it's utilizing value-based pricing, but discounts tactically unravel that strategy to competition-based pricing. I'll show ways to identify where discounts are bleeding profits.

This course is one of three video-based pricing courses. The other two courses are:

• Pricing Profitably Analysis and Processes: I explain how to analyze pricing decisions to improve profitability. Cost-plus pricing is a popular pricing methodology, but I explain its weaknesses. I also cover how many parts of a company can work together to improve pricing.
• Pricing Profitably for Your Product's Value: Price is a function of the value provided to customers. This course focuses on customer perceptions of value and their willingness to pay for that value. You'll learn the calculation for value-based pricing. I also touch on pricing ethics.

These courses focus on financial management and profitability analysis of pricing. A Deloitte pricing effectiveness benchmark study found that: "Companies that actively pursue pricing as an important part of their strategy typically outperform industry peers on several financial metrics… Companies that are pricing leaders are 26 percent better at managing true profitability."