Kent B. Monroe / Kent BMonroe
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 ObjectivesStep 2: Assess the Relevant Economics for the Pricing StrategyStep 3: Determine How Your Buyers Perceive PricesStep 4: Determine the Relevant Costs for the Pricing StrategyStep 5: Determine the Characteristics of each Specific Price DecisionStep 6: Integrate Specific Price Decisions into an Overall Pricing StrategyStep 7: Assess the Administrative Structure for Managing the Pricing Function.
