Saturday, February 18, 2006
What is Fair Pricing?
This is a question for the ages. Fair pricing? The company has an idea what this is. The manager has an idea what this is. The commissioned sales rep has an idea what this is. While in reality it is the customer that you are calling on who truly will determine what is fair pricing. Pricing is about perception.
Now, every company sells their products at a markup or margin over their cost. This is where the dilemma of fair pricing gets started. What is fair, 10%...20%...30% over cost. Once again, the customer will typically let you know what they believe is fair. Depending on what you are selling there is perceived value involved when setting your pricing. There is also other factors involved, such as, geographic location, customer type, volume, the item, the product mix, competitive pressures and the market conditions.
Value, by definition, is an amount, as of goods, services, or money, considered to be a fair and suitable equivalent for something else; a fair price or return. Providing value, i.e., exceptional customer service, on-time deliveries, quality products and value-added services allows for charging a certain price. Charging high prices without providing the much needed value is a recipe for disaster. It is a short term fix to increasing profitability and increasing commissions. Remember that you should be earning your commissions. Getting paid for that job that you do.
If you are looking to build long term relationships, create a steady income and enhance your companies profitability you must have fair pricing. Fair pricing is about value. Fair pricing is about consistency and integrity. Fair pricing is about balance.
Now, every company sells their products at a markup or margin over their cost. This is where the dilemma of fair pricing gets started. What is fair, 10%...20%...30% over cost. Once again, the customer will typically let you know what they believe is fair. Depending on what you are selling there is perceived value involved when setting your pricing. There is also other factors involved, such as, geographic location, customer type, volume, the item, the product mix, competitive pressures and the market conditions.
Value, by definition, is an amount, as of goods, services, or money, considered to be a fair and suitable equivalent for something else; a fair price or return. Providing value, i.e., exceptional customer service, on-time deliveries, quality products and value-added services allows for charging a certain price. Charging high prices without providing the much needed value is a recipe for disaster. It is a short term fix to increasing profitability and increasing commissions. Remember that you should be earning your commissions. Getting paid for that job that you do.
If you are looking to build long term relationships, create a steady income and enhance your companies profitability you must have fair pricing. Fair pricing is about value. Fair pricing is about consistency and integrity. Fair pricing is about balance.
