In the competitive realm of the retail sector the way that you price your products is a vital component of creating a successful business strategy. Without careful pricing it doesn’t matter how good the rest of your company works and how well oiled the different processes and staff members are, there will be little chance of growth and success. Through a process of transactional and financial positioning of your products you can begin to understand how you can achieve full visibility for your business, and understand the amount of financial support that retailers are contributing to a purchase. From this solid foundation of understanding the current market and the pricing strategies that are successful, and have been successful in the past, you can begin to develop new pricing strategies that work best for your company, products, marketplace, and potential customers.
With a pricing audit of this nature, through a specialist pricing audit service, you can tailor a programme to suit your specific company needs, tracking the transactional position of the products in question against the perception of those prices and products as your customer sees them currently. What are your customers willing to pay for your products? Once you understand this, you can start to see the real value of your current pricing strategy and the true value of your products within the market.
In terms of pricing there are a few different methods that you can use to approach the market. Each one will take a slightly different approach, and it might be a case that when first starting a business that you are best attempting different price models and strategies to see which best fits your company and customers.
A traditional transaction method is one where uncontrolled transactions are made by third-party organisations and then compared with controlled transactions between related companies to ensure they are operating at arms length. These can include the comparable uncontrolled price method, the resale price method, or the cost plus method.
Transactional profit methods are profit-based methods that measure the net operating profits from controlled transactions, and then putting them against the profits posted by third-party companies with comparable transactions, ensuring all company mark-ups are arm’s length. These methods include the comparable profits method and the profits split method.
It can be difficult to understand the marketplace accurately, and indeed to understand the best methods with which to put together an effective pricing strategy for your products and your specific industry. With the help of a pricing audit and strategy service you can come to terms with the best approach that serves your customers well, and allows you to make great strides in a scalable way within the market. This will help you to create an effective process for your company that works for the long-term and is in-built to the framework you have created to analyse metrics and long-term goals in a strategic fashion over many months and years. With the assistance of a professional audit team you have accurate and effective data and information at the core of every decision you make.