Politics aside, I squirmed at the recent hubbub over our political elite being named and shamed for not knowing the price of milk and by inference, appearing out of touch with price-sensitive shoppers.
I writhed because I too would have waffled and wriggled. I'd squirm further if I was asked the price of a kilowatt-hour of electricity, a low-energy light bulb or a roll of three-ply. At least I couldn't be accused of being a cynic. Oscar Wilde wrote: 'What is a cynic? A man who knows the price of everything and the value of nothing.” In business, perhaps we're encouraging our customers to become commercial cynics.
From a customer's position it's easier to compare prices than judge value propositions. From a supplier's position it's easier to quote jobs than sell them. Although a double-dip recession is hardly the ideal climate to desensitise price-sensitive customers, we owe it to them and ourselves to do the hard stuff. I was recently asked: “Do you merely quote a job or do you sell it?” My shuffling shoes and quotes log analysis told it like it was.
So, there's the rub; how can we accurately put a price on our work if we're clueless as to our costs - fixed and variable? Equally, how can our submitted quotes become marketing opportunities that will convince hot prospects we're offering enhanced value propositions that trounce our competition?
If pricing is pivotal to our profitability and sustainability, then knowing the price we pay for business basics is crucial if we're to get our sums right. The tricky bit is devising a pricing strategy that satisfies both our business needs and our customers' expectations. As we strive to enhance profits and cut costs, we've learnt one strategy doesn't fit all. Whether our pricing strategy is Cost Plus, Value-Based, Market-Oriented or any one of a bucket load to choose from, we're learning that by tuning into customers' needs and their behaviour, we're becoming smarter with prices when we're selling as well as when we're buying whether it be: whole milk, semi-skimmed milk, skimmed-milk, goats milk, Soya milk, lacto-free milk….