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Pricing is often an overlooked piece of the puzzle

Price is one of the traditional four P’s of marketing (Product, Price, Place, Promotion), but of these four it is the one piece which is most often overlooked and can be a somewhat “gray area” in between product or service development, sales, marketing and communications. Overlooking pricing can be very costly to a company, as suboptimal pricing leads to unsatisfied customers and revenue losses.

Too high prices can turn customers away, leading to revenue losses especially with perishable goods and services. Low prices can attract new demand if used wisely but can also lead to lost sales if the low price fails to attract enough new demand. Low prices may also cause potential customers to question the quality of the product/service, especially if they are not familiar with the brand.

Customer focus supports pricing strategy design

In recent years we have seen an increasing focus on customer-centric design of both products and services. This means that companies strive to understand the needs of their customers and engage in an ongoing dialogue with the users of their products or services, without forgetting other key stakeholders such as front-line staff.

″ Companies need to ensure a deeper understanding of the underlying needs and combine it with data on customer satisfaction to create compelling value propositions to their customers.


This is an extremely helpful trend also from the perspective of a pricing professional, as the same data and especially the insights derived also support the design of an effective pricing strategy.


Tailoring pricing strategies to fit the overall strategy

Companies aiming at profitable growth need a longer-term roadmap for the development of their pricing strategy and implementation skills including systems, tools, analytics and practices to achieve pricing excellence in a constantly changing business environment.

Pricing strategies are anything but “one size fits all” and must be tailored to meet the overall strategy of the company, its vision and future aspirations. Even if detailed pricing strategies are unique to a company there are several common areas where most companies have room for improvement. Typical opportunities for quick wins include identifying and stopping price leakages, structuring discounting practices across sales units or areas, and increasing visibility to actual end-customer prices.


Appeal to your customers with more personalized offers

Customers appreciate transparent offerings where it is easy and effortless to find and purchase the appropriate option to meet their specific needs, using a channel which is convenient, at the right price and at the right time. Even better if the company can anticipate the individual needs of the customer and present a personalized offer. Businesses with customer-friendly offerings and pricing models stand out and can expect to see significant improvements in both customer satisfaction and their bottom line.

Capacent’s pricing optimization projects have generated on average 2-5% revenue growth over a period of 3-5 years, with quick wins accounting for approximately 1% revenue growth during the first year.

If you face pricing-related challenges or aim to re-design your pricing strategy do not hesitate to contact us for more information on how we can help you on your path towards pricing excellence!

Nora Härme is a Senior Manager and Pricing Lead at Capacent. She has 15 years of experience from Revenue Management & Pricing within passenger transportation, both air and rail. Our Pricing team combines pricing experience with strong BI & analytics to tackle customers’ pricing challenges all the way from defining, planning and piloting to hands-on implementation.