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Pricing strategies

**Pricing **strategies overview (LM – June 2021) There are many different pricing strategies but all build upon three areas – customer, cost and competition. Once the social entrepreneur is confident in these areas you can look at more complex pricing strategies. Cost-based pricing
  • Map out products/services in detail – what is the customer paying for? What are the variable costs?
  • Demonstrate variable costs on graph, and show current profit margin
  • Show this against fixed costs Competition-based pricing – see competitor mapping
Customer value-based pricing https://www.linkedin.com/posts/robinchu_first-5-out-of-10-only-pricing-strategiesrobin-ugcPost-6564444065209872384-ndke/ Other pricing strategies Contrast pricing – if you have a few different packages -

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Competitor mapping

Competitor mapping** (LM - June 2021)** The price and quality of your products and services will be evaluated in light of what your competitors offer. If you think of your products and services as solutions to a customer problem, we can identify three sources of competition:
  1. Other products and services that can solve the same problem
  2. Internal solutions created by an individual or business in order to solve their own problem
  3. Doing nothing because the problem is perceived as relatively unimportant First identify the different competitors to your social enterprise: What other products and services solve the same problem as your social enterprise? As well as identifying these products and services, write a short summary of their ‘value proposition’ and (where possible) make a note of their prices. What internal solutions have customers created in order to solve their own problem? In addition to identifying these solutions, make a note of their limitations (for example: high cost or inefficiency) and estimate the cost of using them.
Why might a potential customer choose to do nothing rather than purchase from you, purchase from a competitor or develop an internal solution? There may be other problems that potential customers perceive as more important or they may believe that existing solutions (including your product or service) are undesirable.

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Position Analysis Matrix:

Now that you have identified your competitors we would like you to map their relative positions in the market based on price and another key driver of customer value. You will need to select an appropriate driver for customer value for the market that you will compete in. For example the driver might be ‘quality’, ‘efficiency’ or ‘safety’. We suggest you choose a driver that reflects the most important benefit of your product or service (other than price). Imagine that your key driver is ‘convenience’. In this case you would label the right hand side of the x-axis on the matrix below as ‘more convenient’. You label the right hand side of the x-axis as ‘less convenient’. This creates a basis for evaluating the combination of price and value that each competitor is able to offer to customers. Once you have identified the key driver, you should map your competitors onto the matrix. For example using ‘convenience’ as the key driver, you would enter a competitor with a high price but offering high convenience in the top-right quadrant of the matrix.
Product/Service:Value Proposition:Price:
Internal Solutions:Limitations:Price:

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Perfect Client Worksheet

Who is my Perfect client/customer? (age, gender, lifestyle, profession, income) Describe them… **The top five characteristics of my Perfect client/customer are: ** My client/customer’s top 5 problems**, needs or frustrations**** are: ** **What do my ****Perfect **clients/customers want? What would make their life easier? **How do my clients/customers treat me and respond to me: (eg give quality referrals, appreciate my advice, seek my advice, call me for repeat orders or **business) Why do I love working with these clients/customers? What makes them so perfect for ME? **What is it that only I can offer my clients/customers? (the specific benefits I ****alone **can bring to my customers): What makes me irresistible to my clients/customers? What makes me stand out from the crowd? Why should they choose me and not my competitors? How** do**** I want to**** work with my perfect clients/customers?** **Five key points that attract my ****perfect **clients/customers: A short sentence that sums up and describes my perfect client/customer:
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Downloadable Resources

  • [Costing and pricing a product or service](/market/assets/Costing and pricing a product or service.pdf) PDF
  • [Checklist for start up market research](/market/assets/Checklist for start-up market research.pdf) PDF
  • [Market research questionnaires](/market/assets/Market research questionnaires.pdf) PDF
  • [Worksheet Interview Questions Guide In Person](/market/assets/Worksheet - Interview Questions Guide - In Person.pdf) PDF
  • [Worksheet Online Survey Template](/market/assets/Worksheet - Online Survey Template.pdf) PDF
  • [Researching your competitors](/market/assets/Researching your competitors.pdf) PDF
  • [Customer Identification Worksheet](/market/assets/Customer Identification Worksheet.pdf) PDF
  • [Pen Portrait worksheet](/market/assets/Pen Portrait worksheet.pdf) PDF
  • [Profiling your target audience](/market/assets/Profiling your target audience.pdf) PDF
  • [Value proposition canvas](/market/assets/Value proposition canvas.pdf) PDF
  • [Value proposition guide](/market/assets/Value proposition guide.doc) Word
  • [Sources of statistics and market information](/market/assets/Sources of statistics and market information.pdf) PDF