Choosing the right strategy for your business
We have explored various ways to develop your CPQ pricing strategy in our recent articles. So how do you choose and effectively implement your strategy?
Well, unfortunately, we can’t tell you what pricing strategy is right for you and your business. Every company is different with various short and long-term goals and diverse products that may well demand different approaches.
Depending on your product or service (and the cost of its production/delivery) you may have a lot, or very little, leeway for running short-term reduced pricing strategies to raise awareness or sales. Always align the CPQ strategies you are considering with your business plan to ensure you retain and maximise profitability.
We’ve said it before, and we’ll say it again – for the best results, keep both the benefits to your business and the benefits to your customer in mind.
Make sure you support and retain your customers as well as secure new orders. Always consider ‘Customer Lifetime Value’ – repeat custom is good for every business.
Testing
Yep, you knew it was coming.
As with most things, the only real way to know what pricing strategy is right for your business is to test.
Initially, you should be able to narrow down strategies for testing to those that could work for your business, by losing any that are just not profitable or actionable in your organisation.
With your final list, you may decide to do a simultaneous test;
- Have Bundle Pricing, Up-Selling, Volume and Discount price strategies available to your sales team and therefore to your customers.
- See which has the best uptake and which offers the best results.
- Or maybe they will all prove valuable in different circumstances for different clients.
Discounts can be appropriate at any time, including seasonal offers or during product launches when you are establishing your product in a market.
- But what level of discount?
- Try a few and review which prove most effective – when also weighed up against the margin they yield.
List Price
Although we have not considering list or standard price in detail in this series, it is worth highlighting that you need to ensure your initial product pricing is appropriate before you explore complementary strategies to boost sales, position or brand
Make sure you have considered market share, market growth, competitor products, product positioning and how to best determine your prices – is it based on the products perceived value by the customer or simply on your production costs plus margin.
Tie these considerations to your business and product lifecycle goals to help determine both what your list prices should be, then what other strategies are appropriate.
Remain Flexible
Whatever your pricing strategy right now and whatever you decide to try moving forward it is important to remain flexible. Markets change, customers change, new competition enters a sector, interest rates and inflation move effecting costs.<
As CRM consultants, specifically for Salesforce, we have worked with an incredibly wide range of businesses and seen all these CPQ Pricing strategies in action and working well.
Simplifying these strategies into actionable processes within your sales team and keeping it simple for your customer are both crucial to success.
Best of luck in building or developing your pricing strategy. If you need any advice about pricing within Salesforce, please get in touch with our team – we’d be happy to help.
Join the conversation
- Have you determined which CPQ pricing strategies you will be trying?
- Have you tested any of the strategies already?
- Any other thoughts or questions – please comment below
