What is the process for developing a strategic pricing model?

Market and customer-centric companies should account for the following when building a pricing model Customer behavior, expectations, relative size of expenditure, price-quality perception Competitive behavior and substitutes (the availability of alternatives) Value- your solutions end- benefit (the relative value or need for the product or service) and differentiators (the special features or services that distinguish the product)

Further, market research, including competitor pricing and customer willingness to pay, should also influence your pricing goals. Additionally, your goals may need to be revisited and adjusted as the market conditions change. It's not a "set it and forget it" situation.

Pour ma part, je dirais qu'un processus d'élaboration d'un modèle de tarification stratégique implique généralement plusieurs étapes clés. En premier lieu, il est essentiel de comprendre les besoins et les préférences des clients ainsi que la dynamique concurrentielle du marché. Ensuite, il faut analyser les coûts associés à la fourniture du produit ou du service délivré par l'entreprise, tout en prenant en compte la valeur perçue par les clients. Enfin, il est nécessaire de tester et d'itérer le modèle pour s'assurer qu'il est aligné avec les objectifs stratégiques de l'entreprise et qu'il pourra contribuer à génèrer des revenus durables à long terme.

Cost structures can change over time. Economies of scale is a concept where the more you produce, the cheaper it gets per unit. This could alter your break-even point and profit margins. Also, market conditions, like inflation, can impact your costs and pricing strategies.

We must not ignore "price elasticity," which is how sensitive your customers are to changes in price. This is a key factor in determining your pricing strategy. For instance, essential goods like bread have low price elasticity because people will buy them regardless of small price changes.

A real-world example of this is airline tickets. Airlines constantly evaluate how demand changes with different price levels. They adjust prices based on seasonality, demand elasticity, and even income levels of their target customer base. Ever notice how flight prices shoot up around the holidays? That's demand evaluation in action. External factors like economic conditions or global events can also influence demand. For example, the demand for masks skyrocketed during the COVID-19 pandemic, independent of price changes. Knowing how external factors affect your demand is also crucial for your pricing strategy.

Markets change, new competitors arise, and consumer preferences evolve. Regularly updating your research helps you adapt your pricing strategy accordingly. Also, competitor analysis tools and software can make this task more manageable and accurate.