Pricing Profitability Analysis and Processes

Pricing is one of the most powerful ways to improve – or destroy – profits. This course can help you improve the pricing practices at your company or allow you to help your clients make better pricing decisions. 

I'll begin by explaining cost-plus pricing. This is a popular pricing methodology but is fraught with some significant weaknesses. The next few lessons dive into the financial analysis of pricing decisions. The best pricing levels may be contingent on a company's production capacity. 

Setting the price for a new product or in a new market can be very difficult. I'll offer some tips. Once we set that starting price point and begin selling at it, we gain knowledge of how prices, costs, and volumes interact. We can then begin adjusting prices to optimize profits. I'll offer some ideas on how to do this.

Finally, pricing is a team sport. Each part of a company has a different perspective and role in setting prices. I'll explain why some believe that Finance should lead pricing discussions.

This course is one of three video-based pricing courses. The other two courses are:

• Pricing Profitably for Your Product's Value: Price is a function of the value provided to customers. This course focuses on customer perceptions of value and their willingness to pay for that value. You'll learn the calculation for value-based pricing. I also touch on pricing ethics.
• Pricing Profitably in the Face of Competition: The focus of this course is how other companies can impact prices. I show how to analyze the profitability at stake by responding to competitor pricing. You'll learn common pricing strategies relative to market pricing. Finally, I'll show how to identify and reduce poor discounting practices.

These courses focus on financial management and profitability analysis of pricing.A Deloitte pricing effectiveness benchmark study found that: "Companies that actively pursue pricing as an important part of their strategy typically outperform industry peers on several financial metrics… Companies that are pricing leaders are 26 percent better at managing true profitability."