Who are the winners in the battle for the customer? Six tips for optimal pricing

Marlene Blomquist Börjesson, Managing Partner at Evolvefy, met with Helge Gjerstad, CEO of Atenga Insights Nordic, to understand what drives prices and who the winners are in the battle for the buyer/consumer. Atenga Insights Nordic are expert in pricing and identifying the product features and market segments that generate the highest willingness to pay.

-If actual willingness to pay is considered, profit margins can increase by 25-40%. To get there, companies need to investigate and evaluate optimised pricing together with features and messages and compare the different sales channels against each other. Pricing today is a whole science with many parameters to consider, says Helge Gjerstad.

Competition for the customer is more challenging today as many companies use e-commerce as a sales channel or their primary sales channel. This means that consumers/customers can more easily compare offers and products and thus make choices based on several variables.

Being constantly aware of what drives the customer and what can lead to increased sales volume and profit margin is an integral part of pricing strategy work. Consumers are often disloyal and quickly change their buying behaviour. Therefore, the company must have a strong relationship with its customers, know its target group, and be constantly flexible in its marketing communication.

-It is essential to investigate each segment/culture/country separately, whether it is a product or service. It is not just about price and demand. Humans tend to let psychology and other non-rational factors affect our behaviour, and they vary between cultures and countries. The price barrier for the service/product varies, continues Helge.

Price barrier has a significant impact on sales.

A method that is becoming increasingly popular in pricing work is to use so-called price barriers. It is the breaking point when the price is perceived as too high or too low in relation to quality. It is the point where one identifies a significant impact on sales. For example, it may involve moving the price from 99 to 100 SEK. To understand the price barrier for different services and products, various parameters such as features, durability, brand, etc., should be considered. The parameters have different values for other products.

The future is here‍

What trends are seen in pricing today?

-We see a shift towards subscription services today. More and more products and services are now offered in subscription form. For example, the car industry has long provided leasing agreements, but now we see similar opportunities for the glasses, clothing, and service sectors. Subscription services are customised and convenient for the customer to stay updated and for the producer to have a steady income. We also see that those who succeed with subscription pricing quickly become profitable, concludes Helge.

Six tips to optimise pricing

• Identify your target audience/target audiences with the highest willingness to pay for your service/product.
• Make sure to differentiate prices for your goods and services for different target groups.
• What features can you highlight to get a higher willingness to pay?
• Analyse how you add value to your message to increase willingness to pay. Then add value to your offer and package it for optimised pricing.
• Find out where your price barriers are - the psychological price points where a small price change significantly impacts demand.
• Communicate with your customers and the market.

Want to know more about Atenga?

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