Provide pick-a-plan options: Customers are often interested in a product but refrain from purchasing simply because the pricing plan does not work for them. While some want to purchase outright, others may prefer a selling strategy such as rent, lease, prepay, or all-you-can-eat. A pick-a-plan strategy activates these dormant customers.
Offer product versions: One of the easiest ways to enhance profits and better serve customers is to offer good, better, and best versions. These options allow customers to choose how much to pay for a product. Many gourmet restaurants offer early-bird, regular, and chef’s-table options. Price sensitive gourmands come for the early-bird specials while well-heeled diners willingly pay an extra $50 to sit at the chef’s table.
Implement differential pricing: For any product, some customers are willing to pay more than others. Differential pricing activates price sensitive customers.
Use pricing tactics to complete your customer puzzle: Companies should think of their potential customer base as a giant jigsaw puzzle. Each new pricing tactic adds another customer segment. Starting with a value-based price, employing pick-a-plan, versioning, and differential pricing tactics adds the pricing related segments necessary to complete a company’s potential customer puzzle. Offering consumers pricing choices generates growth and increases profits.
Since pricing is an underutilized strategy, it is fertile ground for new profits. The beauty of focusing on pricing is that many concepts are straightforward and can start producing profits almost immediately.
Rafi Mohammed, is the author of The one per cent Windfall: How Successful Companies Use Price to Profit and Grow (HarperBusiness), and founder of Culture of Profit LLC, a Cambridge, Massachusetts-based consultancy that improves pricing strategy. He is an economics graduate of Boston University, the London School of Economics & Political Science, and Cornell University (Ph.D.).
