Marketing and Sales Session Recap: Pricing Strategies

By Nathan Denny and Scott Axelrod

It’s not hard to go above and beyond customer’s expectations when you’ve already been working with them. But how does a company communicate that added value to potential new customers? That’s one of the questions discussed in this Private Advisory Board session on pricing strategies.


How can a CEO move from a “one size fits all” pricing approach to something much more flexible and value-oriented? What are some of the options and pitfalls others have experienced?

Why It’s Important

The company has historically offered three pricing options: fixed price, retainers, and time and materials (hourly). Evolving into a performance-based compensation will minimize the hassle related to the pricing conversation, plus maximize profitability by better defining for both company and clients what exactly will be accomplished.

A challenge: Clients often don’t actually know, numerically, the specific goals they want or need to accomplish, or they’re unable to by flexible with budgets.

The company also experiences ebbs and low points of the year; there’s a desire to fill this “downtime” with appropriately priced work.

Getting pricing right increases both sales and profitability. Getting it wrong means reducing profitability, overworking people, etc.

Re-stated Issue:

How can we provide pricing options to our clients that meet their needs, but also match well with our profitability needs?

Clarifying Questions (Background/Understanding)

Before proceeding, define:

  • Your gross margin
  • Your sales process and sales cycle
  • The skill of your sales team (are they good at finding pain points and offering solutions?)

Suggestions (Solutions)

  • Get your client to view you as a total solution, and not a commodity.
  • In turn, get to better understand your client, and make sure you’re identifying and selling to their consistency, reliability, stability, which are collectively more important than price to most customers.

Action Plan

The company is already in the advanced stages of pricing strategy, having already performed competitive pricing analysis and produced several possible solutions. This CEO was seeking additional advice or expertise from a community of peer executives, and gained insight into how better to build a model of what a total pricing package should look like based on customer needs and the company’s margins.


When bidding on new work, how can you make sure potential new customers really understand the service and added value you’re providing, so they don’t base their purchasing decision only on price?

Re-stated Issue:

How can we get new customers to look past price and see the real value in working with us?

Why It’s Important

The business is service oriented, so its prices aren’t always going to be the least expensive option for new customers.

Clarifying Questions (Background/Understanding)

  • Do you see yourself providing a service, or a solution?
  • Do you know what your margins are on your various types of customers?
  • How many customers do you have?
  • How well do you know your customers?
  • How well do you know your potential customers?
  • Have you specialized in anything in particular?
  • Do you sell to the CEO or the purchasing office? If you’re selling to a purchasing office you are a commodity. If you are selling to a department head you might be selling a solution (extra value). Know what you can sell to each customer.

Suggestions (Solutions)

Understand your margins for your ideal members (recurring), versus one-off projects. Understand what creates value for each customer. Stop doing what takes time and delivers little or no value, especially if it’s not important to the customer.

Talk to your customers! In this poor economy, spend more time building relationships and show interest in them. Get people to tell you what like, and what they don’t like, about the current process. Talk about the quality you bring. Then get back to them with solutions.

Action Plan

This CEO’s action plan includes:

  • Defining the company’s niche in the industry.
  • Talking to customers directly and better identify what’s important.
  • Building more solid relationships with customers, getting to know them better.
  • Figure out what’s the most profitable part of the business, and turn down work that isn’t profitable.

Session date: Feb 7, 2012
Originally published: Feb 7, 2012

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