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Eight essential questions while pricing a product / service

August 7, 2009

Eight essential questions

Below are some introductory pricing diagnostic questions you can ask within your organization to help kick-start the 1% mindset approach while you are pricing a product / service

1. What are your pricing objectives?

* What is your companyᄒルs overall strategy, core values, and mission?

* Do your pricing strategies link with them?

* Are there examples in which pricing practices conflict with your core values?

2. How would you describe your current pricing process?

* From start to finish, how would you map this process?

* Are there approvals or built-in checkpoints?

* Does this process differ in regards to bids versus day-to-day pricing?

3. How is your pricing strategy determined?

* Who is involved?

* What factors are considered?

* Are customer pricing breakdowns taken into consideration within revenue/margin planning sessions?

* What strategy is applied across different product lines?

4. What is your marketing strategy?

* Do you perform market segmentation studies, or do you take a gut-feel approach to who your customers are?

*  How does each segment value your products? How does the value relate to

pricing?

* Is your sales organization trained to sell based on value?

5. Who is responsible and accountable for pricing?

* How much attention does pricing receive within the company?

* Are there gaps in the pricing expectations of various company stakeholders?

* Is there an advantage to having a dedicated pricing analyst or pricing manager?

6. What type of analysis is performed on pricing?

* Does your company often rely on gut-feel pricing?

* Are market research, pilot tests, and transactional analysis components of your pricing analysis?

* Are costing and competitive analysis integrated with your pricing?

7. How do you measure pricing results?

* How often do you review your pricing, and who is involved in this process?

* Does your company monitor how much sales negotiations occur during a sale, and how that affects final prices?

8. What is the current process to review and improve pricing?

* How often, if ever, are reviews performed?

* Are early warning pricing reports provided to highlight potentially negative trends?

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