Added value through professional price management

PRICING Structured pricing models benefit both the company and the customer. How exactly this works will be discussed at the Swiss Pricing Forum entitled "Added value through professional price management". This will take place on September 16, 2015.By Christian Wirth*When setting prices, companies often experience a dilemma. To maximize profits, they would like to set a high price. At the same time, they are afraid of scaring off customers with a high price. Intelligent pricing models lead out of this dilemma. They use a variety of instruments to maximize customers' willingness to pay and open the way to new customer segments.One effective instrument is differentiation. You form customer segments and offer product variants that address the needs and different willingness to pay of the individual customer segments. An example of this is the various luxury, organic and discount lines in the Swiss retail trade. From gourmets to large families, every need is met. The prices of different variants of the same product vary by a factor of ten or more.Simplified selection through bundlingBundling is another powerful tool. It simplifies the choice for the customer and at the same time promotes sales. Examples of this are the packages of the large telecom operators or the menus of the fast food chains. Companies also like to pack slow-moving items that would otherwise not be bought into the bundles. The bundles are thus "inflated" and customers have the impression that they are getting a lot of performance for their money. At the same time, comparison with the competition is made more difficult.Different product variationsParticularly fascinating are the instruments that work on the psychological level of the customer. Human beings only function rationally to a limited extent. They always perceive things in the context of their environment. Many companies therefore use price anchors. Expensive product variants are offered only, in order to let the other articles appear favorably. One example of this is coffee shops. The largest cappuccino of a well-known chain costs 7.30 Swiss francs. The price of 5.90 Swiss francs for the smallest variant no longer seems so high.And what does the future hold?Digitalization will also shape price management. By storing and analyzing customer behavior, companies are able to design their offers very dynamically and individually. Airlines have been working with these models for some years now, and even small businesses like the hairdresser next door can benefit from them. Prices in stationary retail are also becoming increasingly dynamic. Large retailers will introduce digital price tags. And with customized promotions sent to customers' smartphones, only the people you want to reach will receive a discount offer. By offering discounts to customers who would buy the product anyway, Swiss retailers are losing millions of francs a year. The savings potential is therefore enormous and the effectiveness increases additionally.Swiss Pricing Forum

Under the title "Added value through professional price management", the first Swiss Pricing Forum will take place on September 16, 2015 in Bern. Pricing experts from Switzerland will present and discuss new topics related to price management and exchange experiences. The forum is aimed at pricing managers and those responsible for pricing in companies and organizations, as well as interested representatives from teaching and research. Further information on the forum can be found at http://www.optimalprice.ch/landing-page/swiss-pricing-forum. ----------------*Christian Wirth, owner of Optimal-Price GmbH, advises companies on setting and optimizing their prices. He has many years of experience in price management in the automotive, telecommunications and financial services industries. For more than 18 years he held leading positions in marketing and key account. Since fall 2014, he has been teaching "Price Management" as a guest lecturer at the Bern University of Applied Sciences.