This great video explained pricing. Most people think that price is simple. It is just the price the company set for the product or service. The decision of price is more complicated than that. As marketers, we need to pay very close attention to the decision of the price. It is not only what we want to receive for that product. It is our cost plus the competition price plus the value our product has to the customers. Setting the price right can have a very important impact on our profitability.
Mr. Brian K. McCarthy made a great and interesting video on a very critical marketing topic, which in this video the topic is pricing. Pricing is the only way to increase profitability and on the contrary, can ruin your business/organization all together. I learned that there are two key considerations and those two are pricing methods and pricing execution, which both contain plenty of information and are both extremely important when speaking in terms of pricing. I also learned that the goal is value pricing and strong execution. I liked that Mr. Brian McCarthy showed and used simple, easy to use and remember equations that are crucial to know when dealing with pricing in marketing. This video was nicely thought through and well organized. It is also very helpful to those that are current marketers and those that would like to pursue marketing in some sort of aspect, such as myself! Thank you!
This video is very informative and detailed in the importance of pricing when it comes to marketing strategies. There is no denying that price is a very important aspect of the success or failure of an organization. Pricing is extremely delicate and that is because there are some many forces within any organization that can determine wether a set price is the optimal point for successfully driving profits. Forces that drive pricing decisions are mentioned in the video, competition, demand, cost, and many others. In my industry, which is auto parts retail, pricing is highly determined by competition. In the Dominican Republic which is where I've had most of my experience, we consider this industry as whole sale and the price is usually determined by the organization that has the higher volume of sales within the market.
Great video on pricing from Brian McCarthy. He’s right! Pricing is at the core of all marketing elements that can make or break a business. I would like to highlight the fact that having due diligence and being aware of your industry’s competitive intelligence is critical to set your pricing. With regards to real estate, yes you need to know your products and services inside out. While you need to know industry information, it is still crucial that you are aware of your competitors and how their market practices. Over the years, I have seen many investors sacrifice on integrity for the right price. This is something I am not willing to entertain. While I provide real estate and property management services for many investors, I will not cut corners or jeopardize my license to serve their greedy interests. With this, I have had many challenges formulating my fee schedules with and maintaining fairness and integrity among all my transactions. Logistically, I have to look at my interest returns as a basis for setting pricing. But at the end of the day, investors want to go with where they are getting the best services for the best price. Every case is different, but in the end, I always try to do my best by people.
Thank Brian K. McCarthy for such an explanatory video. Your exposure really helps to clarify the pricing process in the market. The price is one of the most important aspects to consider in an exchange. You can launch your business or you can break it. I work in the Real Estate business, generally, the most used price method to list a property is the price of the competition, we make comparables of properties in the area, with similar characteristics that were sold in the last six months or are active at the moment. Once the property is listed, the value-based customer will play its role, where the buyer decides to put an offer in consideration of what he believes the property is worth. In new construction properties, the three pricing methods are taken into account, the cost focused, being based on the price of construction cost, the competition focused and customer value-based pricing.
This was a very informative video. At first I started thinking about what strategy I could use and what to focus on. Once the explanations of each were elaborated, I realized a combination is best as mentioned. A combination of both the method and execution is something I may not have considered before watching this video. It is very important to know this since as mentioned that "the single most important item in evaluating a business, is if they have pricing power". This has truly changed my understanding and knowledge of the importance behind the strategy.
Great lesson! As quoted in the video, there is no faster way to increasing your profitability or to ruining your business than pricing. This is all too true since many companies become too caught up in increasing revenue by raising prices that they fail to analyze the perceived value of the good or service being offered. When companies fail to assess the best pricing method in order to maximize profitability and market themselves accordingly, they are setting themselves up for failure. Companies should consider both pricing methods and pricing executions. By first understanding costs and monitoring their competition they are able to establish the perceived value of the product based on their customers. They could later execute and implement the new pricing along with communication to ensure that benefits and differentiation is well explained to customers along with training of sales and marketing teams to ensure that the price changes are sought through and can be monitored to reflect effectiveness and customer willingness. Pricing is crucial to the success of a business and should be treated as such by more companies.
Working in the catering industry, my company has always used cost-focused pricing, and I always assumed it was a perfect fit. After watching your video, however, I realized that a small business like mine would benefit much more from customer value-based pricing. I believe that by utilizing marketing research and customer feedback, I can fine tune an idea for a fresh take on pricing. McCarthy shed light on the fact that our company frequently falls into the commodity trap, in which we must constantly undersell in order to remain competitive in our market. Doing so simply isn’t sustainable. I feel that in bringing a new pricing method to our company, we could stay more in tune with our customers and provide value and a personalized touch that only a small business can provide.
Value-based pricing is a really interesting concept used by many marketers. I found a great definition of it when reading an article "Value-based pricing is the method of setting a price by which a company calculates and tries to earn the differentiated worth of its product for a particular customer segment when compared to its competitor.”' Tying this McCarthy's video, companies have a great opportunity to make money through value-based pricing - here are some steps: 1. Refer to a specific segment of the market 2. Understand the segment's "next better alternative" from competitors (essential point of comparison when calculating value-based pricing) 3. Differentiate the brand (what's our added-value?) and 4. Place a dollar amount on the differentiation. Because customer value info is sometimes hard to discern, it is important to base this process our segment's next best alternative (if our product was not available on the market) and on our product added-value (what makes it better?).
Although I think that the customer perceived value is the most important method for price assignment, this video helps a lot to understand better that actually you need to keep in consideration all methods in order to get the most competitive and profitable price. The customer perceived method, however, is what connects to a good pricing execution, as well as gives the company that to-go market strength needed, because it gives a starting point to evaluate a range of possibilities against the competitors and in favor of the company. Thanks to this video, I feel that I have a more holistic thinking in terms of pricing inside the company.
The most important piece of information presented in this video is how relative pricing is to marketing, and how much pricing can impact most aspects of business. The statement discussed by Adam Smith is what I feel impacts me most in my professional life. We constantly need to consider that pricing is more than the monetary value we place on a product, and we must consider the impact acquiring it will have on our customers. This is why e-commerce has taken on such popularity today, as it is the easiest way for consumers to obtain what they want and need. This eliminates their perceived hassle of driving to a store, waiting in lines, and having to have interactions prior to a purchase. For retailers with physical locations, such as the one I operate, we need to facilite transactions for those who prefer quick and less invasive retail interactions when purchasing a new product or service. This is why incorporating online pickups among other concepts into retail stores can help to ensure consistent traffic, and retaining some sales that might be lost to online sales. Another portion of this video discusses customer-value based pricing. This is important because it is about focusing on the customer needs and the benefits of the product, and it is all based on how much the customer believes the product should cost. This is the pricing method used in my current business, and I think it is important to keep in mind that you must always ensure that your product meets the needs. This helps to both acquire new sales, and retain current sales and accounts.
This video gives a great explanation on how to set price for a specific product or service. After watching this video, I have a better understanding on the aspects and factors that need to be considered when setting a price. One of topics that attracted my attention was the Cost Competition. Sometimes, we think that we can disrupt an industry or market just by providing the same quality for less. However, this might not be the best approach because we will get into a price war like it was mentioned in the video. If you are a start up business, that is the last thing that you want to see happening since you do not have a recognized brand and the only factor that triggers your consumers is price. Moreover, your competitors (with a established brand) with more resources will be able to drop their prices even more and gain competitive advantage over your organization.
This video does a good job of explaining the importance of pricing for an company and how marketers influence the process. I agree in that the focus of pricing should encompass all three methods, cost, competition and customer value in order to have the most effective price execution. A key message in this video is that of the importance of clearly communicating the differentiation of the products and benefits to employees and properly train the sales and marketing teams. If this not done effectively it can hinder the outcome which is profitability and higher revenue.
This is a very informative and useful video. Mr. Brian McCarthy stated that a price could either help a business succeed or it could break the business. You have to take a lot of different factors into consideration before putting a price into a product or service. When I started my business back in 2012, one of my main issues was figuring out which cost method I was going to use. I wasn’t sure if I should choose the “Cost Focused” or “Competition Focused” or “Customer value-based Pricing” method. What I decided to do is ask potential clients what value did these products bring to them specifically. The second step that I did was purchased similar products from the competition directly. Finally, when I was ready to sell my products, I took into consideration all three methods and came up with a price that would make the most sense to my potential clients based on the value my product would bring to the client and also a price that was not far from the competitions. Even though my product was of better quality, my consumers were price sensitive.
Professor McCarthy does an excellent job describing the importance of pricing in this informative video. He points out that pricing plays a crucial part in the broad marketing perspective as it can increase profitability or hurt the business. McCarthy explains the pros and cons of the three main pricing methods: cost focused, competition focused and customer valued focused. I had not considered what he mentioned about customer value-based pricing, it made the most sense in understanding how today’s biggest brands are so profitable: “firms make money where the spread between their cost and perceived customer value is greatest” Ultimately, there are challenges in determining the value of the customer which can be addressed by listening, conducting market research and product testing. A mix of all pricing methods, along with a strong pricing execution should be used when setting prices.
This video is extremely useful to me and my business, especially at this moment in time. Selling premium luxury leather goods is very dependent on pricing, especially in the market we are currently in. Our main market in the Caribbean is a very brand loyal market and are willing to pay premium prices for our premium goods. However, now that we are expanding in the the US, we need to carefully set our prices to make sure it sets us up for success and allows us to correctly position ourselves in a new market. This video did a great job of opening my eyes to that and showing me that it is crucial that the prices of our goods are set correctly from the get go. Many companies have failed before even starting thanks to overlooking how important it is to price your product correctly.
This video gave a great overview on the importance of pricing and how it closely relates to marketing. In the video, Mr. McCarthy emphasizes that good businesses successful when they obtain strong pricing power. In order to become profitable, a business must execute smart par icing methods and executions. What mainly stood out to me was that business with weak pricing executions usually tend to offer discounts, special offers and promotions, or give away free products without understanding the right price for what they are trying to sell. In order to implement proper pricing, the business must understand and monitor the competition, evaluate the cost of production, and observe the price based on the value to the customer. By observing these key elements, the business can price their products or services properly to ensure a successful profit.
McCarthy did a great job explaining the details of pricing and how to develop an effective pricing strategy. It should be noted that pricing involves Cost Focused, Competition focused AND Customer value focused efforts. It takes a village and efforts of the company as a whole to develop and justify pricing. While customer value information is hard to discern it is extremely important that sales staff is properly trained to communicate differentiations and benefits. Also important to keep in mind that we want to create and build demand but also be able to sustain it. High profits attract competitors and the business should be prepared to satisfy demand in a positive way to stay above competition.
Pricing is crucially vital to either “making or breaking” your company. As mentioned in the video, “there is no faster way to increasing profitability or to ruining your business”. Some enlightening aspects from this video are the different price methods and when they’re appropriate. Additionally, pricing execution needs to be taken into consideration seeing as this is the “realized price” that customers pay. Another noteworthy, but known area mentioned in the video are the ways that a company can attract customers (i.e. with discounts, special offers, etc.). Lastly, one of the most critical aspects that I will definitely carry with me after watching this video is the fact that pricing communication needs to be shared throughout the various levels of the company to ensure a unified selling point/message.
Great and very instructive video which provides useful solutions to design the best pricing strategies; this became extremely beneficial for my current job position in the dairy food industry. Working with customers from different countries needs to take into consideration diverse elements in terms of setting a pricing list, like agreeing the price per container, or volume purchased. We use the three methods presented in the video: cost focused, competition focused, and customer value - based price. But, we always try to provide our customers with the best options to build long term relationships. This video is valuable to understand the process of determinate the right pricing methods and execution that it fits our company, and at the same time build customer value.
This was an informative piece, as it not only provides the various pricing methods but also sheds light on the growing importance of customer-value based pricing. I’ve experienced this first hand, as my employer recently launched a one of a kind product with no competition. They’ve decided to maximize their future profit by requesting accounts to make a high down payment for the “luxury” of having the product available in their centers. Yet the down payment doesn’t provide consignment units, and limited marketing support to sell it to their end consumer. Although the customers have paid for the product, they constantly express their frustrations and negative perception about the company over-pricing the units, and how one day the competition will come in and take over our business. The field sales representatives have relayed the information to upper management but nothing will change, as their initial pricing objective has been set up to maximize market-skimming pricing. This is an example of not taking into consideration the complete perception of our customers towards our prices and what we provide.
Mr. McCarthy presented a very thorough and comprehensive outline for how pricing relates to marketing and how you can position your marketing campaign towards success by practicing profitable, competitive prices. The industry that first came to mind was fashion retail. With 4 years of in-store experience and 1 year of corporate experience, I understand the importance of meticulously following effective pricing strategies. From a top-down perspective, a business can decide on a price for a product, but how it travels from the corporate, district, local, and store levels is crucial to executing the pricing technique. I am a firm believer, more employers need to seek the suggestions and recommendations of their sales managers and associates to creating effective pricing strategies for their brand. As a manager or associate, you are working closely and intimately with a client on shopping decisions that weigh very heavily on their satisfaction levels. Additionally, because many customers practice comparative shopping, they can determine what they'll pay for a product fairly quickly because they have done research. What Mr. McCarthy failed to mention is how a marketer can intercede and interrupt the pricing strategy sessions in the business? This question may sound simple, but in my experience in corporate, the pipeline of communication isn't clear or easy to navigate. Who makes the final pricing decisions? The marketer? The wholesale eecutive? The sales director?
The video has been very helpful in explaining the different pricing strategies that companies use to price their products. At my current job, we have predetermined prices for all the products we sell, but sometimes the sales people give special pricing for their customers based on the relationship they have with them. They want to make sure that the customers are happy while at the same time generating profits for our company. Sometimes the sales people at my company give special pricing to compensate any difficulties or issues our customers had experienced in the past, and sometimes they give special pricing for being new customers, depending on who the customer is. This falls within the Customer Valued Based Pricing.
Great points Brian K. McCarthy! Pricing could be difficult and affect your profitability. The three pricing methods you discussed were super helpful in setting a price to a service or product. I used to work for a restaurant where I used to see how the owners used to analyze every factor before setting a price to a particular dish. Setting a price to a dish could be chaotic since the prices of food cost could vary. Before setting a price we should consider every factor like: competition, product cost, etc. this will help us choose the best price technique. Thank you for the video.
Watching this video really changed the way I looked at pricing. In this video, I learned how important pricing is and how determining a price doesn’t really mean this will be the set price of the product, since there are a lot of aspects or noise to keep into consideration at the time of execution. As part-owner of a small family business in the Dominican Republic, I never really understood the different options of methods available to set the proper price for our services. We always based ourselves on the competition and what other people where offering out there. One thing I would be taking into consideration from now and on whenever we’re setting prices and developing future pricing strategies is to focus on setting pricing methods that make sense to my industry - understanding the cost, monitoring competition, and recognizing the importance of a price based on the value of the customer. Moreover, I would be focusing on having a strong price execution as we go to the market - having someone who would understand the importance of price and how to properly introduce the profit equation and help to set the right standards based on my company’s values, communicate differentiation and benefits of my services, and invest in training for my personnel. Thank you, professor McCarthy, for summarizing and synthesizing these terms for easier and faster comprehension of the topic. Great video!
The video is informative and accurate. Since I started my first steps in marketing my first manager told me that pricing plays a critical role in decision-making as well as building an image for the company. In my own company, I decided to focus on small business and entrepreneurs. Thus, the decision then lies with my company, or whether I want to target the premium customers or the volume customers - And this decision can be made by managing my pricing strategy, hence, I set my pricing to fit my clients and my target market. I truly do believe that pricing strategy is one of the most important P in the marketing mix and its importance is increasing with the increase of products and services worldwide.
After this video, you will gain an understanding of the pricing method and the pricing execution. I no understand that pricing method help a company determines the price it will go to market with. A company must focus on the cost of producing the product or service, price of competition, and customer value. Now I now the effective formula to set price. Thank you for sharing.
Pricing is a new concept for me. In my current job, we don't have to determine a price of products. We have set membership prices that don't typically increase. This video helped me understand how to efficiently determine how to set prices. The price can raise or lower profitability by 50% was very interesting to me. The price means everything to a consumer and if you think about it, when we go to a store that's almost the first thing you look at and that helps you determine if to purchase or not. Marketing is such a broad area and this course has helped me realize how many things to take into consideration when it comes to the consumer. Pricing is one thing I didn't really think about, you would think that this would be determined by the financing department but this helped me realize that pricing is a huge process in the sale of a product or service.
This video gave a great overview of all the components to be considered when choosing the best pricing strategy. Going to market with a well analyzed, strong price execution from the beginning can really save some companies from going back and forth on the product price. This does not mean that we should not watch the competition, but at least we are less likely to fall into the price wars which reduce profits drastically. In this day and age with customers knowing what they want and having much more ways of getting it, it is more important to analyze our target audience based on psychography rather than demographics alone to be able to really align our products with that of the customers. This will help us further choose a customer value based price where the transaction costs will be lower for both parties.
There are a few distinct aspects in this video that gave me a different perspective on pricing marketing. The first is learning the different pricing methods that companies or organizations use. This is different than what we use at our organization because since it is a non-profit we are not always focused on profits and returns. Instead, we focus on providing services. That being said, to manage a successful organization, one must be mindful about how budgeting and pricing plays a big role in that process. Another aspect that I was not familiar with was the go-to-market pricing strategy. Good and helpful video.
Many times when setting a pricing strategy, companies can overlook small details. I was blown away when Brian mentioned how just small variations in price can raise or lower profitability by 50%. Though in my current role I don't not play a part in pricing methods or execution. I do however encounter customer behavior in the retail industry with pricing changes such as reduced prices. Though it may seem negative to the bottom line when reducing prices, prices are not too deeply reduced where profit is still not made. Often times a reduction in price causes customers to purchase sometimes more than they would have if there were no reductions at all. The sale has been marketed to customers who like to shop sale and feel like they are getting a better deal. This has drawn customers in and just bringing them in the door opens lots of other opportunities when they may decide to impulse buy something at full retail.
I have previously worked in marketing departments as well as design departments in companies, and haven't really been around numbers and pricing. This video helped me understand better the pricing process, from revenue, costs and profits. I believe every marketing department should be aware of the company’s numbers and pricing, because they may be used as leverage in strategies depending on them.
Great info about pricing and it’s relation to marketing. The particular topic about pricing methods did a lot for me. I always thought the “cost focused” pricing method was the go-to method for all businesses. However, I learned that there is a positive and a negative side to this approach. One positive of cost focused pricing is that all the information needed is available. The negative is that customers and competition are not taken into consideration. I found this part of the video to be noteworthy because I always thought to have a perfect price you would need to consider your competition and your customers. All in all, this video is a great tool to have around when pricing your products.
The pricing insights we have obtained from this video are all very useful. Especially when he adds emphasis to the fact that we must use all three approaches: competition pricing, value to customers and intended profit. I work in the hospitality industry for a high-class restaurant where the prices are very high. We already count the value to customer when formulating the prices since it includes a “show” which other restaurants don’t include. But because we are the only ones in the city who include a “show”, the customers still think our price is too high because they have nothing to compare too. I guess this is the problem with pioneer industries but can be overcome by educating the customer.
Pricing is indeed a very important aspect of any business. A company has to be able to price correctly as this can make the difference between raising or lowering its profit. There have been many occasions where I’ve asked business owners how they came up with the pricing for their products and they would mention that they decided on the price because that’s what the competition was charging. It is very beneficial for a company to consider all three pricing categories: cost focused, competition focused and value-based pricing. Each strategy has pros and cons, but I do agree that if a marketer can consider the product’s cost and compare it to competitor's cost while considering the value to the customers, then that marketer will be able to go to market with a strong pricing execution. I also like that Mr. McCarthy touches on the fact that everyone within the organization should be trained on pricing. I think this makes it easier to sell the benefits and values of the product to the consumers.
This article made it very clear to me that pricing is crucial to any business because when it’s done right it can increase profitability, on the other hand if it’s done wrong it can ruin the business. In the company that I work for, we focus our pricing strategy on cost and competition only, and that makes us be in the commodity trap. Our business is already considered a commodity one, but if we increase our brand equity and therefore also increase our customer value, we can easily exit that trap we are in. Our competition has a higher budget than us when it comes to marketing, we don’t have resources for any kind of marketing research, major activities, testing and everything else that could help us know what our perceived value is and try to grow it. With no information about what consumers think of our brand, what they are willing to pay for our products, our only source of data is the feedback that our sales team brings in along with monitoring the competition and how consumers interact with the brand on social media. One other issue that makes it very hard for us to increase prices since our demand is very inelastic (commodity business) and there are several substitutes for our products including no name brands in the market that are very appealing to our price sensitive customers. A solution to increasing and communicating our products benefits in order to grow our perceived value is launching “value products” that target a higher purchase power consumer, building a relationship with them, an emotional connection to make sure they help us spread the word out and be loyal to us.
It is easy to think that the right thing to do as a brand, is to bring up the price for immediate profitability. I like the way Brian mentions that the price can be a great way to either increase profitability or ruin your business. It really makes you realize that you cannot just carelessly increase your price as a quick fix. The pricing methods discussed together seem like a sound strategy that, along with the Pricing execution, could lead to a healthy profitable price for a product. I agree that there needs to be a focus on market research, an eye on the competitor costs as well as keeping that return on investment in mind. I tend to focus just on the ROI and the fixed cost and fail to see the competitor pricing or the customer value. This will be something that I pay more attention to.
This is very interactive and appealing information with regards to pricing topic. I have always asked myself what an optimal price for a service/product should be, especially on such an environment with constantly changing market dynamics. The best possible product and service at the lowest possible costs should represent one of the few marketing objectives plans a company has as a long term goals. I think that price is also heavily influenced by another vital factor which is not generally given the consideration it deserves. I refer to growth and expansion and modernization. A good pricing strategy should take into consideration that costs, competitor and customers for items change, so the price will have to respond properly. In the free and competitive market which characterizes our economy- A perfect price is established when the seller and the buyer each improves his comfort by the trade. This idea cross into my mind by remembering a interested topic learned in school regarding the ‘Distribution approach to marketing exchange’, where the flows of information, innovations and compensation are critical elements of the marketing exchange process. In my opinion, Price is the greatest and the strongest ‘P’ of the four ‘Ps’ of the mix and this is because price is the “pulse” of the economy. Thus, when conducting analyses on finding the most advantageous price, companies should not only take into consideration the profitability of the firm, but also the well-fare of the global market.
There are multiple take aways from Brian McCarthy's pricing video. He mentions how relevant it is to consider both pricing methods and pricing executions when it comes to setting the right price for your item. This information is very influential and inspiring for someone within the marketing or sales realm. Many people, and I include myself, have found this procedure of setting the right price for an item or service quite difficult, but Brian presents us three different pricing methods and explains executions that will give that pricing a reasoning. The way this is influential is because it will reset your mind and helps you understand that its important to price for value and to be ready to sell with a strong price execution.
This video has definitely influenced me to change my approach to pricing within my photography business. Thank you for breaking down pricing the way you did and clearly identifying the two key considerations in deciding pricing; methods and execution. I realized that I have only considered my expenses and customers without considering my competition. The fact that you shared that, “studies have shown that small variations in price can raise or lower profitability by very significant margins” was alarming and really has encouraged me to spend more time researching so that I can perhaps introduce new pricing for this upcoming year. Value pricing and strong execution here I come!
Pricing is a critical part of the profit equation. Pricing itself can either lower or raise profits by significant margins that can affect a business. The key points of pricing methods and execution are crucial because one, it determines the market prices and two, the ability to price. I think these two key factors are critical because it shows the business is focused on not just beating the competition but valuing its customers. Furthermore, the execution allows for that further research on current and future customers. This is because as a business, you want to be aware why your price can communicate a differentiation between another competitive company and highlight the benefits for a higher prices or even lower ones.
This video was really helpful in understanding pricing methods and execution. I personally have no experience in pricing decisions nor go-to-market pricing strategy. This video explained in a simple and effective manner what you should cover on pricing in order to succeed. Pricing is a critical element that if we don’t manage it well could ruin the entire business. From this video, you can see that external elements like, competitors and consumer perception, are as important as internal values like your costs and contribution margin goal. Many factors to think of before setting the final price. Many elements I mentioned above plus remembering that your competitors are on your heels, the consumer value- based and other external factors (trends/insights/seasonality), that you should consider as well before setting the price.
I was not aware of the importance of pricing. I enjoyed watching this video, as it was very detailed in explaining pricing. It was interesting to earn that pricing is the fastest way to increase profitability with in a company, and it is the fastest way to ruin a business. When I first thought of pricing, I thought of just adding a value to a certain product or service in regards to certain quality. A company should carefully consider all variations within their pricing methods in order to raise their profit. They should also pay close attention to small details and ensure they understand the best pricing method that fits the company. An interesting fact found in the video was that companies could actually price products and services based on customer value. This helps companies focus on customer needs, the benefits produced by products or services, creating value and increases customers’ willingness to pay for the actual product or service. If I had an organization, I believe this would be a great method to price products and services because it would require extensive research on the target market and would create opportunities to build strong rapports with customers. The only two problems I would potentially face while using this method would be collecting all the information needed on customers and if successful, the increasing profit could open doors for new competition within the market and industry.
Hello Brian, I believed your pricing on marketing tactics is such a great perspective. Because it is closely created to so many parts of marketing, it can definitely have a large impact on each type of tactic used throughout marketing plans. I agree that customer value based pricing should be a main concern in pricing strategy. This would include customer, brand and competition research. The perceived value that the company needs to portray assists with catering to the customer, and increasing their willingness to pay for the value can impact the brand awareness, likeability and preference in the market. I think it is important to I also think that a pricing execution or realization is the most difficult that is used to display the pricing value which is a core part of marketing. I also agree that the marketer needs to do a combination of cost, competition and value within the company’s own development such as employees.
This was a great video. This puts of my pricing questions into perspective. I have always wondered how the price of an item was determined. Now I know, there are pricing method and pricing execution to accomplish things. Understanding how the pricing method entails cost, competition, and customer value makes total sense, and will help me in the future when put in situations involving price.
This video presents a clear and simple overview of price and pricing methods. As marketers is vital to take into consideration how the correct pricing method can affect the profit equation - as explained by McCarthy. Particularly interesting, the customer value-based pricing as it reflects the value of the product/service from the customer’s perspective and level of affordability. Although, this pricing is primarily set per the customer’ s perceived value of the product, is important to segment the market as part of the pricing execution; this would allow engaging with different types of customers/consumers as the prices would reflect these variations. This goes aligned with the fact that an organization/company must have a comprehensive understanding of the costs and monitor competition to use their pricing as another path to differentiation. Thank you!
This information is very powerful in an environment where everything is becoming a commodity. In today's environment, driving efficiencies in price is playing a very critical role in winning business and remaining competitive. However, the downside is that it is disrupting many industries and companies. Of particular importance, is the concept described as pricing for "customer value". If you are able to articulate the value correctly, you can then, position your product more effectively and more importantly, speak your customer's language. You need to know how the market is pricing, how your competitors are pricing, what your prospect/target is buying, what your contribution margin is in order to craft this "customer value" pricing approach. You need data. Your need to gather specific data to craft your approach, your go-to-market pricing strategy. You can definitely grow the value of each unit by taking this approach and in turn, you can definitely grow your profits.
Thank you, Brian McCarthy, for shedding some insight on pricing. Currently, I am working as an event coordinator and I am constantly trying to figure out ways to adjust my pricing to meet my client's needs, and as you mentioned increase profitability if executed correctly. You mentioned three different pricing methods, but within my industry, I feel as if being competition focused would be the most beneficial. As an event coordinator, clients who are “shopping” around to find the most high-quality service at an affordable price are constantly approaching me. Many times, I try to compare my pricing to my competitors and I am trying to stay as competitive with my pricing as possible.
Thank you, Mr. McCarthy, for your explanation, it seems to be useful. I have gone through a pricing process, and it has always been very complicated for several reasons, first, it involved several areas of the company (operations, finance, sales, and marketing), I still do not understand who is the area in charge of pricing, or if it is a together work. All times we analyze the cost of production, transportation costs, internal costs and how is the competition in the market, etc. Usually, the most common discussion among areas is that the area of marketing wants to increase prices, while the sales area wants to lower them because the competition is cheaper. When we did an investigation we realized that their cost was much lower than ours because they did not operate correctly (they did not buy quality raw material) and against that we could not compete what made us make a complete change of strategy for all the brand, we even had to focus on other products because we definitely could not compete with those products. Thank you. Patty Lahera
It was really interesting to consider the three different pricing methods, and the way that they affect how a company prices its products. During hurricane Irma, in Miami, I noticed that some brands were very competition focused and tried to get the most they could out of selling things like water, gas and plane tickets. Other companies, however, were much more customer value based. They seemed to consider the fact that making it easier for customers to obtain the emergency supplies they needed during the hurricane would make their brand more valuable overall, even if the profit during the hurricane was a bit less. The companies that were more cut throat and inflated prices have received a lot of negative press, while those that took the time to gage customer needs holistically seem to be looked at much more positively.
Mr. McCarthy, this video provides very good and interesting information. Pricing is a very critical component in a business. Your statement that studies have shown that small variations in price can raise or lower profitability as much as 50% is remarkable. It highlights the importance of pricing showing why we must be very careful in pricing method. I think a lot of companies do check the competition's pricing and don’t see the negative customer value or price war profitability their strategy includes. While watching this video, I thought of the ongoing fight between Amazon and Walmart. Amazon will reduce prices based on competitor pricing and Walmart will make sure their customers know that they will match any price from competitive vendors on printed flyers or website. Amazon is making it difficult for Walmart, or any company to compete. It’s frustrating as a customer because as I ask myself - is this competitive pricing affecting our service quality? How do we even know if the prices are reasonable or justifiable?
This short video provides crucial information about pricing. As a matter of fact, I think that the way businesses set their prices needs to be evaluated carefully, as it can have consequences. Basically, businesses charge their customers for the consumption of the product and the value that they get from the service. In my opinion, businesses need to understand how pricing affects their models, so they can better select their prices. Pricing does not only play a crucial role in the decision making of businesses but also helps on building either a positive or negative image towards them. In that sense, I think that the customers and the competition need to be taken into account to know what prices the business will set.
As a marketing professional, I agree that all pricing methods should be reviewed when deciding pricing. Each method gives you a unique insight, which is why all should be considered. After researching each, they should all be compared to meet somewhere in the middle. A company doesn’t want to lose value of their product, but doesn’t want their customers to believe it’s overpriced for its value, and the price should not be a significant amount higher or lower than a competitor. Once all the pricing methods are considered, then you review the product execution.
This video introduces marketing perspectives that many people tend to overlook. Often at times, people think marketing is all about advertising and making sales, however, a major role that marketing plays in the business world is knowing how to effectively price your product on the market. As quoted in the video by Warren Buffett, “the single most important decision in evaluating a business is pricing power.” If marketers do not take this concept into consideration, their other marketing strategies, advertising and sales, will turn out to be ineffective. "Pricing is a critical part of the profit equation,” in getting the price right, specifically for your target audience, impacts the profitability for your business. It’s imperative to know the two key considerations that were covered in the video: pricing method and pricing execution. The pricing method refers to how a company determines its go-to-market prices while the pricing execution refers to a company’s ability to actually get the price it sets. Using these concepts as a “rule of thumb” gives more insight on what is important when setting a price. We must know the appropriate price range to set for specific products and must also take into consideration whether that set price will boost the overall profit for our business.
I really like the idea of a customer value-based pricing and I think it’s an approach that, if done well, can create great revenue for a company. Smaller and medium-size businesses may not have the resources necessary to conduct all the data that will allow for this kind of pricing approach, so they will more than likely turn to the competition or cost methods instead. I agree with Mr. McCarthy in that the best idea is to use a combination of all three. Any company will automatically have the cost of their goods or services, so it’s a matter of doing some research on competitors and gathering data from customers. For small businesses that may not have the resources to conduct research, there are tools out there that can provide some insight as to how their product or service is doing such as customer reviews (Yelp, Google reviews), the only downside to this is that this is done once the product is in the market, and a company would have to adjust their pricing post-launch.
I really like the video. It made me realize how important is to understand the customer value-based pricing decision. When we focus on costs and competition to set the price we might end up lowering a lot the product's price in order to sell faster. Customers could distrust the product because the price looks too good to be true.Very attractive prices, in some cultures, raise suspicions. Having in mind the customer's mentality can help finding the "perfect" price as well.
Small business owners fall in the trap of not pricing correctly all the time. I live in Miami, a city known for amazing small businesses, yet I fear that many of these businesses can’t thrive, because they don’t truly understand the total cost of keeping their businesses running. Once they figure out that cost, then they can best price their products to make money, be competitive and offer optimal value to customers. Your video is straight forward and it reminds small business owners that if their business doesn’t make sense on paper, then it doesn’t make sense. It also shows that pricing takes continued research, flexibility and discipline, as the price must have strong pricing execution to ensure a business thrives. To me, the most interesting topic is customer value-based pricing,” because if a small business, like a bakery, gets this right, then that business can charge more for everything, because their customers fall in love with them, a great example is Starbucks.
Great video! The first approach really connects with me as I can use the customer value-based method in the industry I work, which is advertising. I strongly believe that this is the most suitable method for an agency like the one I used to work where offers customized and personalized solutions to each client.
Great insightful video on pricing strategies. Pricing is a crucial aspect to an organization, it is not just a number. The price can affect a company negatively or positively. If implemented correctly, it can raise profit, otherwise it can lower profitability. There are various pricing methods. In my previous position at an art gallery, the organization would focus at first in cost focused strategy, based on the material cost and labor of creating the art and what it should sell for. The organization grew and began using customer-value based cost, which focused on the customer and how important the product was to the customer. Customer value was difficult to understand, but by research and contact with the consumer, this price method would work well and the compensation would be higher. The execution would work well, but in times of sales, the profits were not as well made. Overall, great video on understanding the importance of pricing.
Very informative video, Brian. I especially appreciate the example you presented for each method, such as the shoe company using the "cost focused" pricing method which focuses on achieving greater return on investment, yet does not place too much emphasis on customers and competition. I feel that the balance between optimal pricing methods and pricing executions directly ties into an organizations orientation towards the market place, i.e. the philosophy guiding marketing strategies. Over the years we have seen many concepts that have guided marketing orientations, such a, product and selling concepts that have emphasized product cost on consumer decision making and customer value respectively. As you stated, in regards to pricing methods & executions, the goal is to have a balance cost focused, competition focused and value-based pricing methods in order to reach strong pricing execution. Believe this goal can be achieved by adopting or emphasizing a holistic marketing approach which guides marketing strategies in a more balanced approach and places importance in all aspects of the company.
1. As a marketing professional, I agree that all pricing methods should be reviewed when deciding pricing. Each method gives you a unique insight, which is why all should be considered. After researching each, they should all be compared to meet somewhere in the middle. A company doesn’t want to lose value of their product, but doesn’t want their customers to believe it’s overpriced for its value, and the price should not be a significant amount higher or lower than a competitor. Once all the pricing methods are considered, then you review the product execution.
Great video, pricing is complex and this video makes it straightforward. Consumers nowadays can do price comparisons with the just a few taps on their phones in seconds. Where I work we use perceived-value pricing because of the reputation of our brand that allows to charge a premium. I work in a Caterpillar dealer and we charge a premium because of the value we offer with our products. The workmanship and quality of Caterpillar products has built a lot of brand equity, however due to increase in competition we're moving to value pricing.
Costumer Value based pricing is a topic I have been exposed to before, mainly in my previous job. I used to work in a gym in my home country, and here they tried to maintain their price based on costumer value. It was hard for the people in the marketing team to know exactly how much each costumer was willing to spend, how much they thought the gym was supposed to be priced at, and many other aspects. Due to this past experience, I have a kind of negative view on costumer value based pricing. But after watching Dr McCarthy’s video I see that it actually is good because it will be better for your relationship with costumer in the long run and the costumer will be most likely to return due to the relationship that has formed.
Written text of your comment: Many companies utilize various methods of pricing for their products and services. However, it is up to its discretion, which options to execute. High-end department stores such as Bloomingdales, Neiman Marcus, Nordstrom, and Saks Fifth Avenue sell designer merchandise for an extreme amount of money without being mindful of using strategic tools, yet instead, they execute a cost-focused method to achieve ROI, considering the conduction of a wholesale transaction. Its focus embodies on export trade and taxes. Although consumers are willing to pay X amount of money for a bag because of its name, it is not equivalent to customer value method with a strong pricing execution. Today, retailers are therefore struggling to generate substantial revenue due to consumers self-conscious price awareness; they tend to search for lower prices and sales deals. Therefore, when it comes to price placement, we need to be aware of implying both a strong pricing execution for it to become achievable.
Setting a price is always very difficult; many things need to be taken into consideration before setting it. If it is too high or too low it can harm the business growth. One thing that really captured my attention about the video was when the expert said that small variations could increase profitability by 50% or lower it, if customers are price sensitive their willingness to pay is limited with relation to a customers that is less price sensitive. It is important to take into consideration competitors prices, It is necessary to increase value, because that is the only way to increase at the same time customer’s willingness to pay. Companies need to beware that competitors might try to copy the pricing strategy if they see that for you are working for example on Sept. 29, 2017 an article from “The Economic Times” stated that H&M sold in India more than doubled since the year started, after deciding to change their price strategy of selling the merchandise lower than Zara.
When discussing cost focused pricing, the concept of the value that customers place on a product not being factored into the actual cost of a product reminded me of distribution approach in a way. With the distribution approach, other factors that impact the product are not factored into the price; with the negative side to cost focused pricing, the actual value that customers place on a product is not factored into the cost. Applying this to my brand, I must consider how much I am expending in creating and marketing my brand. Of course I am going to put my best efforts into marketing myself, but what happens if my audience does not recognize the value of that? They may place a low value on that and will consequently not be willing to pay much for my services. Considering the positive side of cost focused pricing, all of the information that I need in order to set my price is available if I know my cost. I am aware of how much time and energy I expend towards my brand and can therefore set the price accordingly. However, I must remember that the value that I place on my brand may not equate to the value that my audience will place on my brand. Finding this balance and setting my price accordingly is key in ensuring that I am able to make a profit.
Price is such an important element of marketing strategy. Price allows us to regulate the demand for products and services. It is very important when establishing the price to take into account not only the total cost of the product but our customer’s perceived value as well. Pricing definitely impacts business profitability, but no matter what method we use, if the customer is not buying, then what’s the point?. The method that increases the probability and sustainability of a company is customer value-based pricing method. As shown in the presentation, this method focuses on customer’s needs and perceived value of the product. This method clearly stems from the Holistic Marketing approach, where creating value for the customer at each step should always be the top priority for companies in order for them to survive in the new marketplace.
Thank you for this video. I wasn't clear on how to approach pricing before but this got me off to a good start. One concept that stuck out to me is the chance that your competitor may react to you undermining its price point. While I'm willing to beat out the competition and forfeit a percentage of my profits to gain customers, I hadn't considered that my actions may trigger a response. Where does product value come in in regards to pricing? Making a product too affordable could, in some ways, devalue the brand correct? Thank you.
I want to share my personal experience with a commission based job that I had several years ago that can really reflect the different aspects of the power of pricing. This job was a selling job in the cosmetic industry and we (the sells persons) were allowed to determine the price by ourselves in order to increase our commission. With every customer, I had to calculate all the variables discussed in the video in my head over a period of time of about three minutes and present my customer the suitable price. Some of the aspects that crossed my mind in the three-minute speech that I had to know my client was: who is my client? How much does she pay for her current products? How much does my bid need to be in order to make a profit after deducting the promotion that I will offer them to close the deal(price execution)? I think that all of these variables need be taken into consideration when you do your pricing, but the method that leads my decision making was to price high in order to create costumer based value. In simple words, I priced high, although I know she pays much less to make my product a premium product and distinguish it from what she already has.
Before this video, I hadn’t really considered the aspect of matching or competing with competitors. I was only focused on my belief in my future business and the costs involved, not factoring in the effect that other similar business may have. Their prices and promotion can effect my own business success, because often customers go with the best pricing, whether or not the quality is better. For example, different grocery stores match prices if you find a cheaper price of the item in common and bring proof. This may seem like a loss by having to reduce the cost, but in the long run, you are keeping business with customers and still getting most of the revenue income intended. The other company may not have as good as a quality as the same product, and therefore they may suffer more loss even though they sell the item at a cheaper cost.
The most interesting part of the video for me was the pricing methods part, the author explains that there are three different methods: the cost focused, the competitor focused and the customer value based pricing, and although the idea is to use the three of them in our companies to get the best strategy possible, there is always a predominant one and we can see it on our everyday products. An example of a cost focused method would be a restaurant, usually they take the cost of their dishes and multiply it for a factor, to get the final price of the dish. A product with a competitor focused price would be a commodity we get at the supermarket such as toothpaste or detergent, usually this products need to have similar prices in order to compete against each other. Finally the most interesting one for me, and the one capable of delivering the biggest profits would be the customer value based pricing, and we can see it on products such as the Iphone or a new version of Nike shoes, where the cost of manufacture is minimal compared to the price it is sold to the public.
I agree! very good video on pricing with detailed explanation. I really enjoyed learning about all pricing methods, my whole life I thought there was just one way to do it! McCarthy also did a great job in helping me understand that small variations in price can raise or lower profitability by very significant margins.
This video, by Brian McCarthy, provided information about pricing in marketing and how different pricing methods can help a company determine how they are going to price their product or service. Brian McCarthy spoke about three methods that could be used to make your pricing decisions: cost focused, competition focused, and customer value-based pricing. Of the three, the company that I work for mainly utilizes the “cost focused” method. When determining the prices of the fire extinguishers that we sell, we always take into account our cost to purchase it from a distributor. We take a look at how much we pay for the actual extinguisher, plus the shipping cost to get to our warehouse. Once we have those two factors determined, we make a decision on which price will cover our cost, as well as generate a profit, per extinguisher sold. As mentioned in the video, “small variations in price can raise or lower profitability,” and in my company’s case, this is spot on. Simply raising or decreasing our price by $5.00 has a significant effect on our profit. This is why we try to avoid lowering our prices per extinguisher because our variable costs only keep increasing, as the years go by. If we begin to lower it too much, we risk the chance of low profitability, which decreases our overall revenue. This video ties into our lecture about price change equations and how one can utilize their CM and revenue to analyze how effective or ineffective a price change can be. This was a great video to watch if you wanted a quick review about pricing in the marketing world!
Pricing is a combination of the three methods; company's cost, competition monitoring and value to customers. When developing pricing for my in-house printing operation within my organization, I have to consider pricing from competitors, my cost and what my clients are willing to pay. My clients can always choose to print at an outside vendor or through online companies. I find interesting how stores like Khols develop their go-to-market price. In my experience, when shopping at a retailer, is exhilarating getting a receipt where it states a savings of $200. I know is a scheme to make me feel like I purchased a bargain when in reality the "regular price" is inflated -- but I still look for coupons and sales to get my discounts.
The perceived value of pricing is the most important aspect of pricing to me, because you can charge a bit more if there's more perceived value. I would always hate my pricing strategy to be solely based on reacting to competitor pricing.
That is exactly what I thought. But as I saw this video and thought about what I have previously learned in marketing classes (marketing masters :)) I think the costumer value based pricing is pretty important. After all, you want to make sure your costumer is happy and willing to return and purchase more things or services from you. With out the costumer you are nothing, so in my opinion costumers are the priority!
I think this is a really good point, and we can see the way perceived value plays out in vegetable sales. Because of the way that trends towards organic food and healthy eating have changed recently, shoppers will pay a lot more for vegetables they think are organic and non-gmo, even if they're almost the exact same product as conventional gmo veggies. The customers aren't just buying veggies, they're buying an investment in health, so the perceived value of non-gmo and organic veggies often outweighs the inconvenience of excessively inflated costs.
I couldn’t agree more, The correct pricing strategy can make or break a business. As a small-business owner, your strategy dictates not only your profit but the way your product is perceived. price is set at the highest level that your target market is willing to pay to find this balance is the most challenging part in every business.
Thank you for your comment! It's true what you stated above, the pricing aspect is the most important for an organization. If prices aren't implemented correctly then the organization will suffer. Pricing needs to be precise for company's so they can make a profit. Also, figuring out how to price your items is crucial as well and needs to be reviewed and thought out. The best method will assist in making a return.
Hi Brittany, Yes pricing a service/ product could be difficult. I agree! This video has a great explanation of pricing. Before pricing a certain product we should analyze our competitors and also consider our product cost. Analyzing several factors will definitely help us with profitability in our business.
How about in an industry where you have practically zero competition? We make photo matts (custom designs) which you can frame and obviously hang on a wall. That I know of yet in the United States, we do not know of anyone else who is doing the same thing as we are. What should our pricing strategy be based on? We are B2C for now.
Actually, you do have competition... unless its unsubstitutable , you always have competition. Normal picture frames, posters, and even art work are considered competition. Brian's recommendation on value should be number one. How valuable are custom photo matts to your target audience? Is it valuable enough to pay MORE than a similar piece of art work? If so, you have a little leverage to price your product more than the average piece of art work. You then have the challenge of communicating that your product is more valuable than other methods of wall hangings. If I were you I would sit down and brain storm what makes my product more valuable than x,y,z. Then I would figure out who cares about this value? 50% Value Pricing , 25% competition, 25% cost Keep in mind though, if this is intended for a niche market ( It sure sounds like it), then you need great margins to cover for the lack of units sold. This is usually the case for most customization products. Hope this helped!
Hello Christopher,I believe your price should be based on the three price methods. Initially taking into account the cost price to guarantee a return on investment. Second, even if you do not have competitors who are doing exactly the same as yourselves, there are other companies that can choose in a slightly different way to cover the same need of your target market. At that time you should make a broader analysis of your competitors and their products and evaluate their quality in comparison with what you are offering. And lastly, in customer value-based, it will help you to determine how much your customers are willing to pay for your product.
Hi Christopher, I consider that if you have competition, probably not direct, but there is always competition, even if it is possible to do it yourself. You could consider as competition the pre-made frames, that there is much supply and many designs, etc. To put a price I would recommend you do a market research that will result in how much your customers would be willing to pay for a product like yours or similar. Along with this research, add the cost of production and if the price is realistic and afordable for your customers launch it to the market. I hope this helps you. Regards!!
That's a really interesting concept, Christopher. Based on McCarthy's well laid out summary, I think we can reach several conclusions on pricing methods and executions for your particular brand and service. Firstly, gathering from what you stated above in regards to not having any direct competition, I believe it is safe to assume we can rule out competition focused methods, which as we is centered on reacting to the decisions of competition. With that being said, I think your best option would be to utilize a mixture of cost focused and customer value based pricing methods. As you say, there is no real competition for you product and service, therefore you should maybe base pricing on you return-on-investment goals. However, you should not neglect the value customers place in your brand; your product is unique and offers a unique experience. Utilize that uniqueness and price your product in a way that it adds value to your customers; find out what price customers are willing to buy your product and what price they are not willing to pay.
This video introduces marketing perspectives that many people tend to overlook. Often at times, people think marketing is all about advertising and making sales, however, a major role that marketing plays in the business world is knowing how to effectively price your product on the market. As quoted in the video by Warren Buffett, “the single most important decision in evaluating a business is pricing power.” If marketers do not take this concept into consideration, their other marketing strategies, advertising and sales, will turn out to be ineffective. "Pricing is a critical part of the profit equation,” in getting the price right, specifically for your target audience, impacts the profitability for your business. It’s imperative to know the two key considerations that were covered in the video: pricing method and pricing execution. The pricing method refers to how a company determines its go-to-market prices while the pricing execution refers to a company’s ability to actually get the price it sets. Using these concepts as a “rule of thumb” gives more insight on what is important when setting a price. We must know the appropriate price range to set for specific products and must also take into consideration whether that set price will boost the overall profit for our business.
This great video explained pricing. Most people think that price is simple. It is just the price the company set for the product or service. The decision of price is more complicated than that. As marketers, we need to pay very close attention to the decision of the price. It is not only what we want to receive for that product. It is our cost plus the competition price plus the value our product has to the customers. Setting the price right can have a very important impact on our profitability.
Mr. Brian K. McCarthy made a great and interesting video on a very critical marketing topic, which in this video the topic is pricing. Pricing is the only way to increase profitability and on the contrary, can ruin your business/organization all together. I learned that there are two key considerations and those two are pricing methods and pricing execution, which both contain plenty of information and are both extremely important when speaking in terms of pricing. I also learned that the goal is value pricing and strong execution. I liked that Mr. Brian McCarthy showed and used simple, easy to use and remember equations that are crucial to know when dealing with pricing in marketing. This video was nicely thought through and well organized. It is also very helpful to those that are current marketers and those that would like to pursue marketing in some sort of aspect, such as myself! Thank you!
This video is very informative and detailed in the importance of pricing when it comes to marketing strategies. There is no denying that price is a very important aspect of the success or failure of an organization. Pricing is extremely delicate and that is because there are some many forces within any organization that can determine wether a set price is the optimal point for successfully driving profits. Forces that drive pricing decisions are mentioned in the video, competition, demand, cost, and many others. In my industry, which is auto parts retail, pricing is highly determined by competition. In the Dominican Republic which is where I've had most of my experience, we consider this industry as whole sale and the price is usually determined by the organization that has the higher volume of sales within the market.
Great video on pricing from Brian McCarthy. He’s right! Pricing is at the core of all marketing elements that can make or break a business. I would like to highlight the fact that having due diligence and being aware of your industry’s competitive intelligence is critical to set your pricing. With regards to real estate, yes you need to know your products and services inside out. While you need to know industry information, it is still crucial that you are aware of your competitors and how their market practices. Over the years, I have seen many investors sacrifice on integrity for the right price. This is something I am not willing to entertain. While I provide real estate and property management services for many investors, I will not cut corners or jeopardize my license to serve their greedy interests. With this, I have had many challenges formulating my fee schedules with and maintaining fairness and integrity among all my transactions. Logistically, I have to look at my interest returns as a basis for setting pricing. But at the end of the day, investors want to go with where they are getting the best services for the best price. Every case is different, but in the end, I always try to do my best by people.
Thank Brian K. McCarthy for such an explanatory video. Your exposure really helps to clarify the pricing process in the market. The price is one of the most important aspects to consider in an exchange. You can launch your business or you can break it. I work in the Real Estate business, generally, the most used price method to list a property is the price of the competition, we make comparables of properties in the area, with similar characteristics that were sold in the last six months or are active at the moment. Once the property is listed, the value-based customer will play its role, where the buyer decides to put an offer in consideration of what he believes the property is worth. In new construction properties, the three pricing methods are taken into account, the cost focused, being based on the price of construction cost, the competition focused and customer value-based pricing.
This was a very informative video. At first I started thinking about what strategy I could use and what to focus on. Once the explanations of each were elaborated, I realized a combination is best as mentioned. A combination of both the method and execution is something I may not have considered before watching this video. It is very important to know this since as mentioned that "the single most important item in evaluating a business, is if they have pricing power". This has truly changed my understanding and knowledge of the importance behind the strategy.
Great lesson! As quoted in the video, there is no faster way to increasing your profitability or to ruining your business than pricing. This is all too true since many companies become too caught up in increasing revenue by raising prices that they fail to analyze the perceived value of the good or service being offered. When companies fail to assess the best pricing method in order to maximize profitability and market themselves accordingly, they are setting themselves up for failure. Companies should consider both pricing methods and pricing executions. By first understanding costs and monitoring their competition they are able to establish the perceived value of the product based on their customers. They could later execute and implement the new pricing along with communication to ensure that benefits and differentiation is well explained to customers along with training of sales and marketing teams to ensure that the price changes are sought through and can be monitored to reflect effectiveness and customer willingness. Pricing is crucial to the success of a business and should be treated as such by more companies.
Working in the catering industry, my company has always used cost-focused pricing, and I always assumed it was a perfect fit. After watching your video, however, I realized that a small business like mine would benefit much more from customer value-based pricing. I believe that by utilizing marketing research and customer feedback, I can fine tune an idea for a fresh take on pricing. McCarthy shed light on the fact that our company frequently falls into the commodity trap, in which we must constantly undersell in order to remain competitive in our market. Doing so simply isn’t sustainable. I feel that in bringing a new pricing method to our company, we could stay more in tune with our customers and provide value and a personalized touch that only a small business can provide.
Value-based pricing is a really interesting concept used by many marketers. I found a great definition of it when reading an article "Value-based pricing is the method of setting a price by which a company calculates and tries to earn the differentiated worth of its product for a particular customer segment when compared to its competitor.”' Tying this McCarthy's video, companies have a great opportunity to make money through value-based pricing - here are some steps: 1. Refer to a specific segment of the market 2. Understand the segment's "next better alternative" from competitors (essential point of comparison when calculating value-based pricing) 3. Differentiate the brand (what's our added-value?) and 4. Place a dollar amount on the differentiation. Because customer value info is sometimes hard to discern, it is important to base this process our segment's next best alternative (if our product was not available on the market) and on our product added-value (what makes it better?).
Although I think that the customer perceived value is the most important method for price assignment, this video helps a lot to understand better that actually you need to keep in consideration all methods in order to get the most competitive and profitable price. The customer perceived method, however, is what connects to a good pricing execution, as well as gives the company that to-go market strength needed, because it gives a starting point to evaluate a range of possibilities against the competitors and in favor of the company. Thanks to this video, I feel that I have a more holistic thinking in terms of pricing inside the company.
The most important piece of information presented in this video is how relative pricing is to marketing, and how much pricing can impact most aspects of business. The statement discussed by Adam Smith is what I feel impacts me most in my professional life. We constantly need to consider that pricing is more than the monetary value we place on a product, and we must consider the impact acquiring it will have on our customers. This is why e-commerce has taken on such popularity today, as it is the easiest way for consumers to obtain what they want and need. This eliminates their perceived hassle of driving to a store, waiting in lines, and having to have interactions prior to a purchase. For retailers with physical locations, such as the one I operate, we need to facilite transactions for those who prefer quick and less invasive retail interactions when purchasing a new product or service. This is why incorporating online pickups among other concepts into retail stores can help to ensure consistent traffic, and retaining some sales that might be lost to online sales.
Another portion of this video discusses customer-value based pricing. This is important because it is about focusing on the customer needs and the benefits of the product, and it is all based on how much the customer believes the product should cost. This is the pricing method used in my current business, and I think it is important to keep in mind that you must always ensure that your product meets the needs. This helps to both acquire new sales, and retain current sales and accounts.
This video gives a great explanation on how to set price for a specific product or service. After watching this video, I have a better understanding on the aspects and factors that need to be considered when setting a price. One of topics that attracted my attention was the Cost Competition. Sometimes, we think that we can disrupt an industry or market just by providing the same quality for less. However, this might not be the best approach because we will get into a price war like it was mentioned in the video. If you are a start up business, that is the last thing that you want to see happening since you do not have a recognized brand and the only factor that triggers your consumers is price. Moreover, your competitors (with a established brand) with more resources will be able to drop their prices even more and gain competitive advantage over your organization.
This video does a good job of explaining the importance of pricing for an company and how marketers influence the process. I agree in that the focus of pricing should encompass all three methods, cost, competition and customer value in order to have the most effective price execution. A key message in this video is that of the importance of clearly communicating the differentiation of the products and benefits to employees and properly train the sales and marketing teams. If this not done effectively it can hinder the outcome which is profitability and higher revenue.
This is a very informative and useful video. Mr. Brian McCarthy stated that a price could either help a business succeed or it could break the business. You have to take a lot of different factors into consideration before putting a price into a product or service. When I started my business back in 2012, one of my main issues was figuring out which cost method I was going to use. I wasn’t sure if I should choose the “Cost Focused” or “Competition Focused” or “Customer value-based Pricing” method. What I decided to do is ask potential clients what value did these products bring to them specifically. The second step that I did was purchased similar products from the competition directly. Finally, when I was ready to sell my products, I took into consideration all three methods and came up with a price that would make the most sense to my potential clients based on the value my product would bring to the client and also a price that was not far from the competitions. Even though my product was of better quality, my consumers were price sensitive.
Professor McCarthy does an excellent job describing the importance of pricing in this informative video. He points out that pricing plays a crucial part in the broad marketing perspective as it can increase profitability or hurt the business. McCarthy explains the pros and cons of the three main pricing methods: cost focused, competition focused and customer valued focused. I had not considered what he mentioned about customer value-based pricing, it made the most sense in understanding how today’s biggest brands are so profitable: “firms make money where the spread between their cost and perceived customer value is greatest” Ultimately, there are challenges in determining the value of the customer which can be addressed by listening, conducting market research and product testing. A mix of all pricing methods, along with a strong pricing execution should be used when setting prices.
This video is extremely useful to me and my business, especially at this moment in time. Selling premium luxury leather goods is very dependent on pricing, especially in the market we are currently in. Our main market in the Caribbean is a very brand loyal market and are willing to pay premium prices for our premium goods. However, now that we are expanding in the the US, we need to carefully set our prices to make sure it sets us up for success and allows us to correctly position ourselves in a new market. This video did a great job of opening my eyes to that and showing me that it is crucial that the prices of our goods are set correctly from the get go. Many companies have failed before even starting thanks to overlooking how important it is to price your product correctly.
This video gave a great overview on the importance of pricing and how it closely relates to marketing. In the video, Mr. McCarthy emphasizes that good businesses successful when they obtain strong pricing power. In order to become profitable, a business must execute smart par icing methods and executions. What mainly stood out to me was that business with weak pricing executions usually tend to offer discounts, special offers and promotions, or give away free products without understanding the right price for what they are trying to sell. In order to implement proper pricing, the business must understand and monitor the competition, evaluate the cost of production, and observe the price based on the value to the customer. By observing these key elements, the business can price their products or services properly to ensure a successful profit.
McCarthy did a great job explaining the details of pricing and how to develop an effective pricing strategy. It should be noted that pricing involves Cost Focused, Competition focused AND Customer value focused efforts. It takes a village and efforts of the company as a whole to develop and justify pricing. While customer value information is hard to discern it is extremely important that sales staff is properly trained to communicate differentiations and benefits. Also important to keep in mind that we want to create and build demand but also be able to sustain it. High profits attract competitors and the business should be prepared to satisfy demand in a positive way to stay above competition.
Pricing is crucially vital to either “making or breaking” your company. As mentioned in the video, “there is no faster way to increasing profitability or to ruining your business”. Some enlightening aspects from this video are the different price methods and when they’re appropriate. Additionally, pricing execution needs to be taken into consideration seeing as this is the “realized price” that customers pay. Another noteworthy, but known area mentioned in the video are the ways that a company can attract customers (i.e. with discounts, special offers, etc.). Lastly, one of the most critical aspects that I will definitely carry with me after watching this video is the fact that pricing communication needs to be shared throughout the various levels of the company to ensure a unified selling point/message.
Great and very instructive video which provides useful solutions to design the best pricing strategies; this became extremely beneficial for my current job position in the dairy food industry. Working with customers from different countries needs to take into consideration diverse elements in terms of setting a pricing list, like agreeing the price per container, or volume purchased. We use the three methods presented in the video: cost focused, competition focused, and customer value - based price. But, we always try to provide our customers with the best options to build long term relationships. This video is valuable to understand the process of determinate the right pricing methods and execution that it fits our company, and at the same time build customer value.
This was an informative piece, as it not only provides the various pricing methods but also sheds light on the growing importance of customer-value based pricing. I’ve experienced this first hand, as my employer recently launched a one of a kind product with no competition. They’ve decided to maximize their future profit by requesting accounts to make a high down payment for the “luxury” of having the product available in their centers. Yet the down payment doesn’t provide consignment units, and limited marketing support to sell it to their end consumer. Although the customers have paid for the product, they constantly express their frustrations and negative perception about the company over-pricing the units, and how one day the competition will come in and take over our business. The field sales representatives have relayed the information to upper management but nothing will change, as their initial pricing objective has been set up to maximize market-skimming pricing. This is an example of not taking into consideration the complete perception of our customers towards our prices and what we provide.
Mr. McCarthy presented a very thorough and comprehensive outline for how pricing relates to marketing and how you can position your marketing campaign towards success by practicing profitable, competitive prices. The industry that first came to mind was fashion retail. With 4 years of in-store experience and 1 year of corporate experience, I understand the importance of meticulously following effective pricing strategies. From a top-down perspective, a business can decide on a price for a product, but how it travels from the corporate, district, local, and store levels is crucial to executing the pricing technique. I am a firm believer, more employers need to seek the suggestions and recommendations of their sales managers and associates to creating effective pricing strategies for their brand. As a manager or associate, you are working closely and intimately with a client on shopping decisions that weigh very heavily on their satisfaction levels. Additionally, because many customers practice comparative shopping, they can determine what they'll pay for a product fairly quickly because they have done research. What Mr. McCarthy failed to mention is how a marketer can intercede and interrupt the pricing strategy sessions in the business? This question may sound simple, but in my experience in corporate, the pipeline of communication isn't clear or easy to navigate. Who makes the final pricing decisions? The marketer? The wholesale eecutive? The sales director?
The video has been very helpful in explaining the different pricing strategies that companies use to price their products. At my current job, we have predetermined prices for all the products we sell, but sometimes the sales people give special pricing for their customers based on the relationship they have with them. They want to make sure that the customers are happy while at the same time generating profits for our company. Sometimes the sales people at my company give special pricing to compensate any difficulties or issues our customers had experienced in the past, and sometimes they give special pricing for being new customers, depending on who the customer is. This falls within the Customer Valued Based Pricing.
Great points Brian K. McCarthy!
Pricing could be difficult and affect your profitability. The three pricing methods you discussed were super helpful in setting a price to a service or product. I used to work for a restaurant where I used to see how the owners used to analyze every factor before setting a price to a particular dish. Setting a price to a dish could be chaotic since the prices of food cost could vary. Before setting a price we should consider every factor like: competition, product cost, etc. this will help us choose the best price technique. Thank you for the video.
Watching this video really changed the way I looked at pricing. In this video, I learned how important pricing is and how determining a price doesn’t really mean this will be the set price of the product, since there are a lot of aspects or noise to keep into consideration at the time of execution. As part-owner of a small family business in the Dominican Republic, I never really understood the different options of methods available to set the proper price for our services. We always based ourselves on the competition and what other people where offering out there. One thing I would be taking into consideration from now and on whenever we’re setting prices and developing future pricing strategies is to focus on setting pricing methods that make sense to my industry - understanding the cost, monitoring competition, and recognizing the importance of a price based on the value of the customer. Moreover, I would be focusing on having a strong price execution as we go to the market - having someone who would understand the importance of price and how to properly introduce the profit equation and help to set the right standards based on my company’s values, communicate differentiation and benefits of my services, and invest in training for my personnel.
Thank you, professor McCarthy, for summarizing and synthesizing these terms for easier and faster comprehension of the topic. Great video!
The video is informative and accurate. Since I started my first steps in marketing my first manager told me that pricing plays a critical role in decision-making as well as building an image for the company. In my own company, I decided to focus on small business and entrepreneurs. Thus, the decision then lies with my company, or whether I want to target the premium customers or the volume customers - And this decision can be made by managing my pricing strategy, hence, I set my pricing to fit my clients and my target market. I truly do believe that pricing strategy is one of the most important P in the marketing mix and its importance is increasing with the increase of products and services worldwide.
After this video, you will gain an understanding of the pricing method and the pricing execution. I no understand that pricing method help a company determines the price it will go to market with. A company must focus on the cost of producing the product or service, price of competition, and customer value. Now I now the effective formula to set price. Thank you for sharing.
Pricing is a new concept for me. In my current job, we don't have to determine a price of products. We have set membership prices that don't typically increase. This video helped me understand how to efficiently determine how to set prices. The price can raise or lower profitability by 50% was very interesting to me. The price means everything to a consumer and if you think about it, when we go to a store that's almost the first thing you look at and that helps you determine if to purchase or not. Marketing is such a broad area and this course has helped me realize how many things to take into consideration when it comes to the consumer. Pricing is one thing I didn't really think about, you would think that this would be determined by the financing department but this helped me realize that pricing is a huge process in the sale of a product or service.
This video gave a great overview of all the components to be considered when choosing the best pricing strategy. Going to market with a well analyzed, strong price execution from the beginning can really save some companies from going back and forth on the product price. This does not mean that we should not watch the competition, but at least we are less likely to fall into the price wars which reduce profits drastically. In this day and age with customers knowing what they want and having much more ways of getting it, it is more important to analyze our target audience based on psychography rather than demographics alone to be able to really align our products with that of the customers. This will help us further choose a customer value based price where the transaction costs will be lower for both parties.
There are a few distinct aspects in this video that gave me a different perspective on pricing marketing. The first is learning the different pricing methods that companies or organizations use. This is different than what we use at our organization because since it is a non-profit we are not always focused on profits and returns. Instead, we focus on providing services. That being said, to manage a successful organization, one must be mindful about how budgeting and pricing plays a big role in that process. Another aspect that I was not familiar with was the go-to-market pricing strategy. Good and helpful video.
Many times when setting a pricing strategy, companies can overlook small details. I was blown away when Brian mentioned how just small variations in price can raise or lower profitability by 50%. Though in my current role I don't not play a part in pricing methods or execution. I do however encounter customer behavior in the retail industry with pricing changes such as reduced prices. Though it may seem negative to the bottom line when reducing prices, prices are not too deeply reduced where profit is still not made. Often times a reduction in price causes customers to purchase sometimes more than they would have if there were no reductions at all. The sale has been marketed to customers who like to shop sale and feel like they are getting a better deal. This has drawn customers in and just bringing them in the door opens lots of other opportunities when they may decide to impulse buy something at full retail.
I have previously worked in marketing departments as well as design departments in companies, and haven't really been around numbers and pricing. This video helped me understand better the pricing process, from revenue, costs and profits. I believe every marketing department should be aware of the company’s numbers and pricing, because they may be used as leverage in strategies depending on them.
Great info about pricing and it’s relation to marketing. The particular topic about pricing methods did a lot for me. I always thought the “cost focused” pricing method was the go-to method for all businesses. However, I learned that there is a positive and a negative side to this approach. One positive of cost focused pricing is that all the information needed is available. The negative is that customers and competition are not taken into consideration. I found this part of the video to be noteworthy because I always thought to have a perfect price you would need to consider your competition and your customers. All in all, this video is a great tool to have around when pricing your products.
The pricing insights we have obtained from this video are all very useful. Especially when he adds emphasis to the fact that we must use all three approaches: competition pricing, value to customers and intended profit. I work in the hospitality industry for a high-class restaurant where the prices are very high. We already count the value to customer when formulating the prices since it includes a “show” which other restaurants don’t include. But because we are the only ones in the city who include a “show”, the customers still think our price is too high because they have nothing to compare too. I guess this is the problem with pioneer industries but can be overcome by educating the customer.
Pricing is indeed a very important aspect of any business. A company has to be able to price correctly as this can make the difference between raising or lowering its profit. There have been many occasions where I’ve asked business owners how they came up with the pricing for their products and they would mention that they decided on the price because that’s what the competition was charging.
It is very beneficial for a company to consider all three pricing categories: cost focused, competition focused and value-based pricing. Each strategy has pros and cons, but I do agree that if a marketer can consider the product’s cost and compare it to competitor's cost while considering the value to the customers, then that marketer will be able to go to market with a strong pricing execution.
I also like that Mr. McCarthy touches on the fact that everyone within the organization should be trained on pricing. I think this makes it easier to sell the benefits and values of the product to the consumers.
This article made it very clear to me that pricing is crucial to any business because when it’s done right it can increase profitability, on the other hand if it’s done wrong it can ruin the business.
In the company that I work for, we focus our pricing strategy on cost and competition only, and that makes us be in the commodity trap. Our business is already considered a commodity one, but if we increase our brand equity and therefore also increase our customer value, we can easily exit that trap we are in. Our competition has a higher budget than us when it comes to marketing, we don’t have resources for any kind of marketing research, major activities, testing and everything else that could help us know what our perceived value is and try to grow it. With no information about what consumers think of our brand, what they are willing to pay for our products, our only source of data is the feedback that our sales team brings in along with monitoring the competition and how consumers interact with the brand on social media. One other issue that makes it very hard for us to increase prices since our demand is very inelastic (commodity business) and there are several substitutes for our products including no name brands in the market that are very appealing to our price sensitive customers. A solution to increasing and communicating our products benefits in order to grow our perceived value is launching “value products” that target a higher purchase power consumer, building a relationship with them, an emotional connection to make sure they help us spread the word out and be loyal to us.
It is easy to think that the right thing to do as a brand, is to bring up the price for immediate profitability. I like the way Brian mentions that the price can be a great way to either increase profitability or ruin your business. It really makes you realize that you cannot just carelessly increase your price as a quick fix. The pricing methods discussed together seem like a sound strategy that, along with the Pricing execution, could lead to a healthy profitable price for a product. I agree that there needs to be a focus on market research, an eye on the competitor costs as well as keeping that return on investment in mind. I tend to focus just on the ROI and the fixed cost and fail to see the competitor pricing or the customer value. This will be something that I pay more attention to.
This is very interactive and appealing information with regards to pricing topic.
I have always asked myself what an optimal price for a service/product should be, especially on such an environment with constantly changing market dynamics. The best possible product and service at the lowest possible costs should represent one of the few marketing objectives plans a company has as a long term goals.
I think that price is also heavily influenced by another vital factor which is not generally given the consideration it deserves. I refer to growth and expansion and modernization. A good pricing strategy should take into consideration that costs, competitor and customers for items change, so the price will have to respond properly.
In the free and competitive market which characterizes our economy- A perfect price is established when the seller and the buyer each improves his comfort by the trade. This idea cross into my mind by remembering a interested topic learned in school regarding the ‘Distribution approach to marketing exchange’, where the flows of information, innovations and compensation are critical elements of the marketing exchange process.
In my opinion, Price is the greatest and the strongest ‘P’ of the four ‘Ps’ of the mix and this is because price is the “pulse” of the economy. Thus, when conducting analyses on finding the most advantageous price, companies should not only take into consideration the profitability of the firm, but also the well-fare of the global market.
There are multiple take aways from Brian McCarthy's pricing video. He mentions how relevant it is to consider both pricing methods and pricing executions when it comes to setting the right price for your item. This information is very influential and inspiring for someone within the marketing or sales realm. Many people, and I include myself, have found this procedure of setting the right price for an item or service quite difficult, but Brian presents us three different pricing methods and explains executions that will give that pricing a reasoning. The way this is influential is because it will reset your mind and helps you understand that its important to price for value and to be ready to sell with a strong price execution.
This video has definitely influenced me to change my approach to pricing within my photography business. Thank you for breaking down pricing the way you did and clearly identifying the two key considerations in deciding pricing; methods and execution. I realized that I have only considered my expenses and customers without considering my competition. The fact that you shared that, “studies have shown that small variations in price can raise or lower profitability by very significant margins” was alarming and really has encouraged me to spend more time researching so that I can perhaps introduce new pricing for this upcoming year. Value pricing and strong execution here I come!
Pricing is a critical part of the profit equation. Pricing itself can either lower or raise profits by significant margins that can affect a business. The key points of pricing methods and execution are crucial because one, it determines the market prices and two, the ability to price. I think these two key factors are critical because it shows the business is focused on not just beating the competition but valuing its customers. Furthermore, the execution allows for that further research on current and future customers. This is because as a business, you want to be aware why your price can communicate a differentiation between another competitive company and highlight the benefits for a higher prices or even lower ones.
This video was really helpful in understanding pricing methods and execution. I personally have no experience in pricing decisions nor go-to-market pricing strategy. This video explained in a simple and effective manner what you should cover on pricing in order to succeed. Pricing is a critical element that if we don’t manage it well could ruin the entire business. From this video, you can see that external elements like, competitors and consumer perception, are as important as internal values like your costs and contribution margin goal. Many factors to think of before setting the final price. Many elements I mentioned above plus remembering that your competitors are on your heels, the consumer value- based and other external factors (trends/insights/seasonality), that you should consider as well before setting the price.
I was not aware of the importance of pricing. I enjoyed watching this video, as it was very detailed in explaining pricing. It was interesting to earn that pricing is the fastest way to increase profitability with in a company, and it is the fastest way to ruin a business. When I first thought of pricing, I thought of just adding a value to a certain product or service in regards to certain quality. A company should carefully consider all variations within their pricing methods in order to raise their profit. They should also pay close attention to small details and ensure they understand the best pricing method that fits the company. An interesting fact found in the video was that companies could actually price products and services based on customer value. This helps companies focus on customer needs, the benefits produced by products or services, creating value and increases customers’ willingness to pay for the actual product or service. If I had an organization, I believe this would be a great method to price products and services because it would require extensive research on the target market and would create opportunities to build strong rapports with customers. The only two problems I would potentially face while using this method would be collecting all the information needed on customers and if successful, the increasing profit could open doors for new competition within the market and industry.
Hello Brian,
I believed your pricing on marketing tactics is such a great perspective. Because it is closely created to so many parts of marketing, it can definitely have a large impact on each type of tactic used throughout marketing plans. I agree that customer value based pricing should be a main concern in pricing strategy. This would include customer, brand and competition research. The perceived value that the company needs to portray assists with catering to the customer, and increasing their willingness to pay for the value can impact the brand awareness, likeability and preference in the market. I think it is important to I also think that a pricing execution or realization is the most difficult that is used to display the pricing value which is a core part of marketing. I also agree that the marketer needs to do a combination of cost, competition and value within the company’s own development such as employees.
This was a great video. This puts of my pricing questions into perspective. I have always wondered how the price of an item was determined. Now I know, there are pricing method and pricing execution to accomplish things. Understanding how the pricing method entails cost, competition, and customer value makes total sense, and will help me in the future when put in situations involving price.
This video presents a clear and simple overview of price and pricing methods. As marketers is vital to take into consideration how the correct pricing method can affect the profit equation - as explained by McCarthy. Particularly interesting, the customer value-based pricing as it reflects the value of the product/service from the customer’s perspective and level of affordability.
Although, this pricing is primarily set per the customer’ s perceived value of the product, is important to segment the market as part of the pricing execution; this would allow engaging with different types of customers/consumers as the prices would reflect these variations. This goes aligned with the fact that an organization/company must have a comprehensive understanding of the costs and monitor competition to use their pricing as another path to differentiation.
Thank you!
This information is very powerful in an environment where everything is becoming a commodity. In today's environment, driving efficiencies in price is playing a very critical role in winning business and remaining competitive. However, the downside is that it is disrupting many industries and companies. Of particular importance, is the concept described as pricing for "customer value". If you are able to articulate the value correctly, you can then, position your product more effectively and more importantly, speak your customer's language. You need to know how the market is pricing, how your competitors are pricing, what your prospect/target is buying, what your contribution margin is in order to craft this "customer value" pricing approach. You need data. Your need to gather specific data to craft your approach, your go-to-market pricing strategy. You can definitely grow the value of each unit by taking this approach and in turn, you can definitely grow your profits.
Thank you, Brian McCarthy, for shedding some insight on pricing. Currently, I am working as an event coordinator and I am constantly trying to figure out ways to adjust my pricing to meet my client's needs, and as you mentioned increase profitability if executed correctly. You mentioned three different pricing methods, but within my industry, I feel as if being competition focused would be the most beneficial. As an event coordinator, clients who are “shopping” around to find the most high-quality service at an affordable price are constantly approaching me. Many times, I try to compare my pricing to my competitors and I am trying to stay as competitive with my pricing as possible.
Thank you, Mr. McCarthy, for your explanation, it seems to be useful.
I have gone through a pricing process, and it has always been very complicated for several reasons, first, it involved several areas of the company (operations, finance, sales, and marketing), I still do not understand who is the area in charge of pricing, or if it is a together work.
All times we analyze the cost of production, transportation costs, internal costs and how is the competition in the market, etc. Usually, the most common discussion among areas is that the area of marketing wants to increase prices, while the sales area wants to lower them because the competition is cheaper.
When we did an investigation we realized that their cost was much lower than ours because they did not operate correctly (they did not buy quality raw material) and against that we could not compete what made us make a complete change of strategy for all the brand, we even had to focus on other products because we definitely could not compete with those products.
Thank you.
Patty Lahera
It was really interesting to consider the three different pricing methods, and the way that they affect how a company prices its products. During hurricane Irma, in Miami, I noticed that some brands were very competition focused and tried to get the most they could out of selling things like water, gas and plane tickets. Other companies, however, were much more customer value based. They seemed to consider the fact that making it easier for customers to obtain the emergency supplies they needed during the hurricane would make their brand more valuable overall, even if the profit during the hurricane was a bit less. The companies that were more cut throat and inflated prices have received a lot of negative press, while those that took the time to gage customer needs holistically seem to be looked at much more positively.
Mr. McCarthy, this video provides very good and interesting information. Pricing is a very critical component in a business. Your statement that studies have shown that small variations in price can raise or lower profitability as much as 50% is remarkable. It highlights the importance of pricing showing why we must be very careful in pricing method. I think a lot of companies do check the competition's pricing and don’t see the negative customer value or price war profitability their strategy includes. While watching this video, I thought of the ongoing fight between Amazon and Walmart. Amazon will reduce prices based on competitor pricing and Walmart will make sure their customers know that they will match any price from competitive vendors on printed flyers or website. Amazon is making it difficult for Walmart, or any company to compete. It’s frustrating as a customer because as I ask myself - is this competitive pricing affecting our service quality? How do we even know if the prices are reasonable or justifiable?
This short video provides crucial information about pricing. As a matter of fact, I think that the way businesses set their prices needs to be evaluated carefully, as it can have consequences. Basically, businesses charge their customers for the consumption of the product and the value that they get from the service. In my opinion, businesses need to understand how pricing affects their models, so they can better select their prices. Pricing does not only play a crucial role in the decision making of businesses but also helps on building either a positive or negative image towards them. In that sense, I think that the customers and the competition need to be taken into account to know what prices the business will set.
As a marketing professional, I agree that all pricing methods should be reviewed when deciding pricing. Each method gives you a unique insight, which is why all should be considered. After researching each, they should all be compared to meet somewhere in the middle. A company doesn’t want to lose value of their product, but doesn’t want their customers to believe it’s overpriced for its value, and the price should not be a significant amount higher or lower than a competitor. Once all the pricing methods are considered, then you review the product execution.
This video introduces marketing perspectives that many people tend to overlook. Often at times, people think marketing is all about advertising and making sales, however, a major role that marketing plays in the business world is knowing how to effectively price your product on the market. As quoted in the video by Warren Buffett, “the single most important decision in evaluating a business is pricing power.” If marketers do not take this concept into consideration, their other marketing strategies, advertising and sales, will turn out to be ineffective.
"Pricing is a critical part of the profit equation,” in getting the price right, specifically for your target audience, impacts the profitability for your business. It’s imperative to know the two key considerations that were covered in the video: pricing method and pricing execution. The pricing method refers to how a company determines its go-to-market prices while the pricing execution refers to a company’s ability to actually get the price it sets. Using these concepts as a “rule of thumb” gives more insight on what is important when setting a price. We must know the appropriate price range to set for specific products and must also take into consideration whether that set price will boost the overall profit for our business.
I really like the idea of a customer value-based pricing and I think it’s an approach that, if done well, can create great revenue for a company. Smaller and medium-size businesses may not have the resources necessary to conduct all the data that will allow for this kind of pricing approach, so they will more than likely turn to the competition or cost methods instead. I agree with Mr. McCarthy in that the best idea is to use a combination of all three. Any company will automatically have the cost of their goods or services, so it’s a matter of doing some research on competitors and gathering data from customers. For small businesses that may not have the resources to conduct research, there are tools out there that can provide some insight as to how their product or service is doing such as customer reviews (Yelp, Google reviews), the only downside to this is that this is done once the product is in the market, and a company would have to adjust their pricing post-launch.
I really like the video. It made me realize how important is to understand the customer value-based pricing decision. When we focus on costs and competition to set the price we might end up lowering a lot the product's price in order to sell faster. Customers could distrust the product because the price looks too good to be true.Very attractive prices, in some cultures, raise suspicions. Having in mind the customer's mentality can help finding the "perfect" price as well.
Small business owners fall in the trap of not pricing correctly all the time. I live in Miami, a city known for amazing small businesses, yet I fear that many of these businesses can’t thrive, because they don’t truly understand the total cost of keeping their businesses running. Once they figure out that cost, then they can best price their products to make money, be competitive and offer optimal value to customers. Your video is straight forward and it reminds small business owners that if their business doesn’t make sense on paper, then it doesn’t make sense. It also shows that pricing takes continued research, flexibility and discipline, as the price must have strong pricing execution to ensure a business thrives. To me, the most interesting topic is customer value-based pricing,” because if a small business, like a bakery, gets this right, then that business can charge more for everything, because their customers fall in love with them, a great example is Starbucks.
Great video! The first approach really connects with me as I can use the customer value-based method in the industry I work, which is advertising. I strongly believe that this is the most suitable method for an agency like the one I used to work where offers customized and personalized solutions to each client.
Very good ! great explanation
Great insightful video on pricing strategies. Pricing is a crucial aspect to an organization, it is not just a number. The price can affect a company negatively or positively. If implemented correctly, it can raise profit, otherwise it can lower profitability. There are various pricing methods. In my previous position at an art gallery, the organization would focus at first in cost focused strategy, based on the material cost and labor of creating the art and what it should sell for. The organization grew and began using customer-value based cost, which focused on the customer and how important the product was to the customer. Customer value was difficult to understand, but by research and contact with the consumer, this price method would work well and the compensation would be higher. The execution would work well, but in times of sales, the profits were not as well made. Overall, great video on understanding the importance of pricing.
Very informative video, Brian. I especially appreciate the example you presented for each method, such as the shoe company using the "cost focused" pricing method which focuses on achieving greater return on investment, yet does not place too much emphasis on customers and competition. I feel that the balance between optimal pricing methods and pricing executions directly ties into an organizations orientation towards the market place, i.e. the philosophy guiding marketing strategies. Over the years we have seen many concepts that have guided marketing orientations, such a, product and selling concepts that have emphasized product cost on consumer decision making and customer value respectively. As you stated, in regards to pricing methods & executions, the goal is to have a balance cost focused, competition focused and value-based pricing methods in order to reach strong pricing execution. Believe this goal can be achieved by adopting or emphasizing a holistic marketing approach which guides marketing strategies in a more balanced approach and places importance in all aspects of the company.
1. As a marketing professional, I agree that all pricing methods should be reviewed when deciding pricing. Each method gives you a unique insight, which is why all should be considered. After researching each, they should all be compared to meet somewhere in the middle. A company doesn’t want to lose value of their product, but doesn’t want their customers to believe it’s overpriced for its value, and the price should not be a significant amount higher or lower than a competitor. Once all the pricing methods are considered, then you review the product execution.
Great video, pricing is complex and this video makes it straightforward. Consumers nowadays can do price comparisons with the just a few taps on their phones in seconds. Where I work we use perceived-value pricing because of the reputation of our brand that allows to charge a premium. I work in a Caterpillar dealer and we charge a premium because of the value we offer with our products. The workmanship and quality of Caterpillar products has built a lot of brand equity, however due to increase in competition we're moving to value pricing.
your teachings are really helpful and clear.
Thank you, they help me understand these principles so much better
Costumer Value based pricing is a topic I have been exposed to before, mainly in my previous job. I used to work in a gym in my home country, and here they tried to maintain their price based on costumer value. It was hard for the people in the marketing team to know exactly how much each costumer was willing to spend, how much they thought the gym was supposed to be priced at, and many other aspects. Due to this past experience, I have a kind of negative view on costumer value based pricing. But after watching Dr McCarthy’s video I see that it actually is good because it will be better for your relationship with costumer in the long run and the costumer will be most likely to return due to the relationship that has formed.
Written text of your comment: Many companies utilize various methods of pricing for their products and services. However, it is up to its discretion, which options to execute. High-end department stores such as Bloomingdales, Neiman Marcus, Nordstrom, and Saks Fifth Avenue sell designer merchandise for an extreme amount of money without being mindful of using strategic tools, yet instead, they execute a cost-focused method to achieve ROI, considering the conduction of a wholesale transaction. Its focus embodies on export trade and taxes. Although consumers are willing to pay X amount of money for a bag because of its name, it is not equivalent to customer value method with a strong pricing execution. Today, retailers are therefore struggling to generate substantial revenue due to consumers self-conscious price awareness; they tend to search for lower prices and sales deals. Therefore, when it comes to price placement, we need to be aware of implying both a strong pricing execution for it to become achievable.
A brand is the gut feeling of your customer when looking at or buying your product
Setting a price is always very difficult; many things need to be taken into consideration before setting it. If it is too high or too low it can harm the business growth. One thing that really captured my attention about the video was when the expert said that small variations could increase profitability by 50% or lower it, if customers are price sensitive their willingness to pay is limited with relation to a customers that is less price sensitive. It is important to take into consideration competitors prices, It is necessary to increase value, because that is the only way to increase at the same time customer’s willingness to pay. Companies need to beware that competitors might try to copy the pricing strategy if they see that for you are working for example on Sept. 29, 2017 an article from “The Economic Times” stated that H&M sold in India more than doubled since the year started, after deciding to change their price strategy of selling the merchandise lower than Zara.
When discussing cost focused pricing, the concept of the value that customers place on a product not being factored into the actual cost of a product reminded me of distribution approach in a way. With the distribution approach, other factors that impact the product are not factored into the price; with the negative side to cost focused pricing, the actual value that customers place on a product is not factored into the cost. Applying this to my brand, I must consider how much I am expending in creating and marketing my brand. Of course I am going to put my best efforts into marketing myself, but what happens if my audience does not recognize the value of that? They may place a low value on that and will consequently not be willing to pay much for my services. Considering the positive side of cost focused pricing, all of the information that I need in order to set my price is available if I know my cost. I am aware of how much time and energy I expend towards my brand and can therefore set the price accordingly. However, I must remember that the value that I place on my brand may not equate to the value that my audience will place on my brand. Finding this balance and setting my price accordingly is key in ensuring that I am able to make a profit.
Price is such an important element of marketing strategy. Price allows us to regulate the demand for products and services. It is very important when establishing the price to take into account not only the total cost of the product but our customer’s perceived value as well. Pricing definitely impacts business profitability, but no matter what method we use, if the customer is not buying, then what’s the point?. The method that increases the probability and sustainability of a company is customer value-based pricing method. As shown in the presentation, this method focuses on customer’s needs and perceived value of the product. This method clearly stems from the Holistic Marketing approach, where creating value for the customer at each step should always be the top priority for companies in order for them to survive in the new marketplace.
Thank you for this video. I wasn't clear on how to approach pricing before but this got me off to a good start. One concept that stuck out to me is the chance that your competitor may react to you undermining its price point. While I'm willing to beat out the competition and forfeit a percentage of my profits to gain customers, I hadn't considered that my actions may trigger a response. Where does product value come in in regards to pricing? Making a product too affordable could, in some ways, devalue the brand correct? Thank you.
I want to share my personal experience with a commission based job that I had several years ago that can really reflect the different aspects of the power of pricing. This job was a selling job in the cosmetic industry and we (the sells persons) were allowed to determine the price by ourselves in order to increase our commission. With every customer, I had to calculate all the variables discussed in the video in my head over a period of time of about three minutes and present my customer the suitable price. Some of the aspects that crossed my mind in the three-minute speech that I had to know my client was: who is my client? How much does she pay for her current products? How much does my bid need to be in order to make a profit after deducting the promotion that I will offer them to close the deal(price execution)? I think that all of these variables need be taken into consideration when you do your pricing, but the method that leads my decision making was to price high in order to create costumer based value. In simple words, I priced high, although I know she pays much less to make my product a premium product and distinguish it from what she already has.
Before this video, I hadn’t really considered the aspect of matching or competing with competitors. I was only focused on my belief in my future business and the costs involved, not factoring in the effect that other similar business may have. Their prices and promotion can effect my own business success, because often customers go with the best pricing, whether or not the quality is better. For example, different grocery stores match prices if you find a cheaper price of the item in common and bring proof. This may seem like a loss by having to reduce the cost, but in the long run, you are keeping business with customers and still getting most of the revenue income intended. The other company may not have as good as a quality as the same product, and therefore they may suffer more loss even though they sell the item at a cheaper cost.
The most interesting part of the video for me was the pricing methods part, the author explains that there are three different methods: the cost focused, the competitor focused and the customer value based pricing, and although the idea is to use the three of them in our companies to get the best strategy possible, there is always a predominant one and we can see it on our everyday products.
An example of a cost focused method would be a restaurant, usually they take the cost of their dishes and multiply it for a factor, to get the final price of the dish.
A product with a competitor focused price would be a commodity we get at the supermarket such as toothpaste or detergent, usually this products need to have similar prices in order to compete against each other.
Finally the most interesting one for me, and the one capable of delivering the biggest profits would be the customer value based pricing, and we can see it on products such as the Iphone or a new version of Nike shoes, where the cost of manufacture is minimal compared to the price it is sold to the public.
Very useful information. Nice refresher on pricing! Thank you for posting it.
I agree! very good video on pricing with detailed explanation. I really enjoyed learning about all pricing methods, my whole life I thought there was just one way to do it! McCarthy also did a great job in helping me understand that small variations in price can raise or lower profitability by very significant margins.
This video, by Brian McCarthy, provided information about pricing in marketing and how different pricing methods can help a company determine how they are going to price their product or service. Brian McCarthy spoke about three methods that could be used to make your pricing decisions: cost focused, competition focused, and customer value-based pricing. Of the three, the company that I work for mainly utilizes the “cost focused” method. When determining the prices of the fire extinguishers that we sell, we always take into account our cost to purchase it from a distributor. We take a look at how much we pay for the actual extinguisher, plus the shipping cost to get to our warehouse. Once we have those two factors determined, we make a decision on which price will cover our cost, as well as generate a profit, per extinguisher sold. As mentioned in the video, “small variations in price can raise or lower profitability,” and in my company’s case, this is spot on. Simply raising or decreasing our price by $5.00 has a significant effect on our profit. This is why we try to avoid lowering our prices per extinguisher because our variable costs only keep increasing, as the years go by. If we begin to lower it too much, we risk the chance of low profitability, which decreases our overall revenue. This video ties into our lecture about price change equations and how one can utilize their CM and revenue to analyze how effective or ineffective a price change can be. This was a great video to watch if you wanted a quick review about pricing in the marketing world!
Pricing is a combination of the three methods; company's cost, competition monitoring and value to customers. When developing pricing for my in-house printing operation within my organization, I have to consider pricing from competitors, my cost and what my clients are willing to pay. My clients can always choose to print at an outside vendor or through online companies.
I find interesting how stores like Khols develop their go-to-market price. In my experience, when shopping at a retailer, is exhilarating getting a receipt where it states a savings of $200. I know is a scheme to make me feel like I purchased a bargain when in reality the "regular price" is inflated -- but I still look for coupons and sales to get my discounts.
The perceived value of pricing is the most important aspect of pricing to me, because you can charge a bit more if there's more perceived value. I would always hate my pricing strategy to be solely based on reacting to competitor pricing.
Vancouver SEO Expert Thanks for the comment! I agree that, if possible, value-based pricing is the best way to go.
That is exactly what I thought. But as I saw this video and thought about what I have previously learned in marketing classes (marketing masters :)) I think the costumer value based pricing is pretty important. After all, you want to make sure your costumer is happy and willing to return and purchase more things or services from you. With out the costumer you are nothing, so in my opinion costumers are the priority!
I think this is a really good point, and we can see the way perceived value plays out in vegetable sales. Because of the way that trends towards organic food and healthy eating have changed recently, shoppers will pay a lot more for vegetables they think are organic and non-gmo, even if they're almost the exact same product as conventional gmo veggies. The customers aren't just buying veggies, they're buying an investment in health, so the perceived value of non-gmo and organic veggies often outweighs the inconvenience of excessively inflated costs.
I couldn’t agree more, The correct pricing strategy can make or break a business. As a small-business owner, your strategy dictates not only your profit but the way your product is perceived. price is set at the highest level that your target market is willing to pay to find this balance is the most challenging part in every business.
Thank you for your comment! It's true what you stated above, the pricing aspect is the most important for an organization. If prices aren't implemented correctly then the organization will suffer. Pricing needs to be precise for company's so they can make a profit. Also, figuring out how to price your items is crucial as well and needs to be reviewed and thought out. The best method will assist in making a return.
Thank you this was very helpful and informative 👍👍
Glad it was helpful, Diontae!
nice explaination thank you sir
+Syed mudasir Ali Thank you for the comment. You are very welcome!
It is often times hard to create pricing for your item. This video was very helpful! Thank you!
+BRITTANY CRAWFORD I'm glad my video was helpful. Thank you for letting me know.
Hi Brittany,
Yes pricing a service/ product could be difficult. I agree! This video has a great explanation of pricing. Before pricing a certain product we should analyze our competitors and also consider our product cost. Analyzing several factors will definitely help us with profitability in our business.
thanks a lot, I got too much information on pricing!
+Omed. zerra You are welcome. Thank you for commenting!
thanks a lot sir
How about in an industry where you have practically zero competition? We make photo matts (custom designs) which you can frame and obviously hang on a wall. That I know of yet in the United States, we do not know of anyone else who is doing the same thing as we are. What should our pricing strategy be based on? We are B2C for now.
Thanks for the question. I recommend basing your pricing strategy on a combination of value and cost.
Actually, you do have competition... unless its unsubstitutable , you always have competition. Normal picture frames, posters, and even art work are considered competition. Brian's recommendation on value should be number one. How valuable are custom photo matts to your target audience? Is it valuable enough to pay MORE than a similar piece of art work? If so, you have a little leverage to price your product more than the average piece of art work. You then have the challenge of communicating that your product is more valuable than other methods of wall hangings.
If I were you I would sit down and brain storm what makes my product more valuable than x,y,z. Then I would figure out who cares about this value?
50% Value Pricing , 25% competition, 25% cost
Keep in mind though, if this is intended for a niche market ( It sure sounds like it), then you need great margins to cover for the lack of units sold. This is usually the case for most customization products.
Hope this helped!
Hello Christopher,I believe your price should be based on the three price methods. Initially taking into account the cost price to guarantee a return on investment. Second, even if you do not have competitors who are doing exactly the same as yourselves, there are other companies that can choose in a slightly different way to cover the same need of your target market. At that time you should make a broader analysis of your competitors and their products and evaluate their quality in comparison with what you are offering. And lastly, in customer value-based, it will help you to determine how much your customers are willing to pay for your product.
Hi Christopher, I consider that if you have competition, probably not direct, but there is always competition, even if it is possible to do it yourself. You could consider as competition the pre-made frames, that there is much supply and many designs, etc.
To put a price I would recommend you do a market research that will result in how much your customers would be willing to pay for a product like yours or similar. Along with this research, add the cost of production and if the price is realistic and afordable for your customers launch it to the market.
I hope this helps you. Regards!!
That's a really interesting concept, Christopher. Based on McCarthy's well laid out summary, I think we can reach several conclusions on pricing methods and executions for your particular brand and service. Firstly, gathering from what you stated above in regards to not having any direct competition, I believe it is safe to assume we can rule out competition focused methods, which as we is centered on reacting to the decisions of competition. With that being said, I think your best option would be to utilize a mixture of cost focused and customer value based pricing methods. As you say, there is no real competition for you product and service, therefore you should maybe base pricing on you return-on-investment goals. However, you should not neglect the value customers place in your brand; your product is unique and offers a unique experience. Utilize that uniqueness and price your product in a way that it adds value to your customers; find out what price customers are willing to buy your product and what price they are not willing to pay.
great...,
Good explanations
Uddeepa, thanks!
This video introduces marketing perspectives that many people tend to overlook. Often at times, people think marketing is all about advertising and making sales, however, a major role that marketing plays in the business world is knowing how to effectively price your product on the market. As quoted in the video by Warren Buffett, “the single most important decision in evaluating a business is pricing power.” If marketers do not take this concept into consideration, their other marketing strategies, advertising and sales, will turn out to be ineffective.
"Pricing is a critical part of the profit equation,” in getting the price right, specifically for your target audience, impacts the profitability for your business. It’s imperative to know the two key considerations that were covered in the video: pricing method and pricing execution. The pricing method refers to how a company determines its go-to-market prices while the pricing execution refers to a company’s ability to actually get the price it sets. Using these concepts as a “rule of thumb” gives more insight on what is important when setting a price. We must know the appropriate price range to set for specific products and must also take into consideration whether that set price will boost the overall profit for our business.