What is the “right price”? Last week I talked about making time to understand our customers and our market so we set a price that helps our product or service sell, rather than hinder it’s reputation in the market (and the reputation of your company). The other side of that coin is setting a price that helps your company make the most meaningful profit.
What is meaningful profit? One that allows you to continue in business, provide great service, treat the team members well… you get the picture. When I first started in marketing, the owner of our company was a consummate engineer – he priced the product based on the costs of the company, not what the market would pay.
This was really gracious for our customers who got a great deal. Team members were also paid well, but there was not enough left over to really create a nest egg to provide a foundation for growth. So over time the company had to be acquired by a larger company. The employees and customers were not served as well once the products were absorbed into a larger organization and product line, plus sales and service teams. I left the company before this happened so do not know if the long run interests were better served, but do believe that short term there was a negative impact.
To answer the question that titles this posting–how would listening have increased profits? If we had made more of an effort to actively listen to, and ask questions of, our customers we would have better known the amount they were willing to pay, and what capabilities to add so that we could increase the prices as needed for the long term security of the company.
Of course, a lot of other factors play into the long-term security of an organization, but profitability is a good place to start. And, perhaps we would have learned the opposite–that our prices were not in line the amount of value that customers received from using our software. That information supports better strategic thinking and planning as well.
It’s hard to reach out to customers at times. What if we do not like what we hear? When money is added to that conversation, it can become more tenuous. And, we all know that conversation usually has far more upside than downside.
What are you waiting for? Pick up the phone! I guarantee you will be glad you did.
What other methods do you use to know what your customers and the market wants and needs? Please share by commenting below.
Have a successful rest of the week!