pricing stratergy life cycle
At SPS we believe setting prices strategically requires a testing and learning approach. We start by examining the way things work today, and identify opportunities to make improvements.
But we don’t simply make wholesale changes across the board. We develop new standards based on understandings of how different types of buyers behave and evidence of potential price changes that may already exist.
We then develop plans to test the strategies, setting expectations and mechanisms to measure results.
We then execute the changes, first in pilots, then if successful in a broader scale.
A critical step in the process is to measure results. Whether in the pilot stage or in full implementation, it is important to determine whether results match expectations. What happened to volumes of items whose prices changed? How did those results differ from items with unchanged prices? Are there different results between different types of customers and are they consistent with the expected results? After answering these questions and more, what future opportunities now exist?
At this point, the cycle starts anew. In this iterative fashion, companies can continuously improve their pricing in a logical fashion – without making unnecessarily risky bets.
