A robust, value-based pricing strategy should an integral part of your corporate culture if you want to maximize profit.
Cost-plus pricing is an outdated method that can leave profits on the table. Think about the value to your customer by comparing your product to alternatives to set a price. Adjust your price up or down to maximize total profits by targeting a price that balances quantity sold with profit margins. Plan for challenging situations like a recession and offer alternatives to that accommodate resistant customers. Creative pricing strategies can lead to greater profitability.
About the Author
Rafi Mohammed is a pricing expert with more than 25 years of experience in pricing issues.
Originally from Milwaukee, Mohammed was raised in Cincinnati. He received degrees from Boston University and the London School of Economics and Political Science before receiving his Ph.D. from Cornell University. He is the Batten Fellow at the Darden Graduate School of Business and the University of Virginia.
Mohammed’s commentary has been featured on several media outlets, including the Harvard Business Review, National Public Radio, the Wall Street Journal, and The New York Times.
He founded a consulting company called Culture of Profit. Through that organization, Mohammed works with businesses on their pricing strategies.