Wednesday, April 11, 2007

Increasing Throughput -- Increase Selling Prices

Continuing our cash velocity discussion started on March 16, 2007

Increase Selling Prices

Changing the selling price for a product or group of products is difficult to cover in few words. Presumably you already have pricing policies and strategy that represent some equilibrium point in the market you serve and getting some minimum T/CU across your mix of products/services. If you understand the perceived value by your customers for the products/services you offer, then to increase prices you must stay within this perceived value or increase your customer’s perception of value. A mafia offer[1] is the Theory of Constraints (TOC) method to increase your customer’s perception of value even in industries considered to be commodities.

In addition, Market Segmentation should be considered. Identify segments of markets that have different values for the products and services you offer, then set selling prices for these markets that are consistent with their perception of value and your mafia offer. Segmentation should help you to match selling price with customer’s perception of value and allow you to maximize your selling price while ensuring that you’re meeting your customer's needs.

[1] We will discuss more about mafia offer in #1 below. Also, see for more information on creating a mafia offer.

... to be continued ...

Here's to maximizing YOUR profits!
"Dr Lisa" Lang
(c)Copyright 2007, Dr Lisa, Inc. All rights reserved.

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