What is price realization

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What is Price Realization, and How Does It Impact Your Bottom Line?

I bet you hear all kinds of pricing advice:
“Increase your prices by 2%.”
“Decrease your prices for your price-conscious markets.”
“Add value anywhere and everywhere to drive customer loyalty.”
Unfortunately, even the best pricing advice can’t work for every single one of your transactions.
That’s why price realization is so important.
Price realization measures actual vs. expected price achieved.
You can’t sell at target price every single time, but that’s the goal. (Or rather, it should be.)
This discrepancy is one metric you need to measure.
Price realization analysis allows you to:
Closely monitor sales teams and their selling tactics
Understand how customers respond to pricing changes
Leverage discounts strategically
5 Ways to Achieve
Profitable Price Realization
1. Make Discounts Strategic
Price concessions can destroy your profits. Discounts undermine
your entire pricing strategy. But you can’t give them up either. You’ve got to make them strategic.
How? Set a maximum threshold for discounts.
Hold your sales reps accountable for selling off target price.
Incentivize on price discipline. Train sales professionals to sell on value.
2. Align Price With Value
If you can’t change the customer’s mind about the price of a deal, it’s time to change the deal itself. What value element are your customers willing to give up?
They have to take a cut on the deal to get a cut on the price.
How to Drive Value-Based Pricing:
Remove value when decreasing price.
Segment customers by the deal components they value. Serve them accordingly.
When customers ask for a discount, ask what they’d be willing to give up.
3. Segment Prices with Mix Data
Earn the highest profit on every deal by customizing your prices for every deal.
Finding the perfect price for each transaction captures the most margin.
Unfortunately, that’s difficult to nail down. Different markets, customers, channels, and products all require different pricing strategies. When you start mixing and matching between them, things get even more complicated.
How to Build a Pricing Cheat Sheet:
Evaluate your transactions for the past year.
Segment your deals and customers into the smallest groups possible.
Build custom prices for each of these segments, further segmented by situation, if possible.
4. Increase Your Prices
Yes, it seems counter-intuitive. But you wouldn’t believe how many businesses underprice their products and services! You should increase prices on a regular basis.
It seems scary, but as long as you continue to drive value and sell on that value, your customers will understand.
....

1. 1 What is Price Realization, and How Does It Impact Your Bottom Line?

2. 2 I bet you hear all kinds of pricing advice: “Increase your prices by 2%.” “Decrease your prices for your price-conscious markets.” “Add value anywhere and everywhere to drive customer loyalty.” What is Price Realization, and How Does It Impact Your Bottom Line?

3. 3 Unfortunately, even the best pricing advice can’t work for every single one of your transactions . That’s why price realization is so important. What is Price Realization, and How Does It Impact Your Bottom Line?

4. 4 Price realization measures actual vs. expected price achieved. You can’t sell at target price every single time, but that’s the goal. (Or rather, it should be.) This discrepancy is one metric you need to measure. What is Price Realization, and How Does It Impact Your Bottom Line?

5. 5 Price realization analysis allows you to: What is Price Realization, and How Does It Impact Your Bottom Line? Closely monitor sales teams and their selling tactics U nderstand how customers respond to pricing changes L everage discounts strategically

6. 6 5 Ways to Achieve Profitable Price Realization What is Price Realization, and How Does It Impact Your Bottom Line?

7. 7 1. Make Discounts Strategic Price concessions can destroy your profits. Discounts undermine your entire pricing strategy. What is Price Realization, and How Does It Impact Your Bottom Line?

8. 8 But you can’t give them up either. You’ve got to make them strategic. How? What is Price Realization, and How Does It Impact Your Bottom Line?

9. 9 Set a maximum threshold for discounts. Hold your sales reps accountable for selling off target price. Incentivize on price discipline. Train sales professionals to sell on value. What is Price Realization, and How Does It Impact Your Bottom Line?

10. 10 2 . Align Price With Value If you can’t change the customer’s mind about the price of a deal, it’s time to change the deal itself. What is Price Realization, and How Does It Impact Your Bottom Line?

11. 11 What value element are your c ustomers willing to give up? They have to take a cut on the deal to get a cut on the price. What is Price Realization, and How Does It Impact Your Bottom Line?

12. 12 Remove value when decreasing price. Segment customers by the deal components they value. Serve them accordingly. When customers ask for a discount, ask what they’d be willing to give up. What is Price Realization, and How Does It Impact Your Bottom Line? How to Drive Value-Based Pricing:

13. 13 3. Segment Prices with Mix Data E arn the highest profit on every deal by customizing your prices for every deal. What is Price Realization, and How Does It Impact Your Bottom Line?

14. 14 Finding the perfect price for each transaction captures the most margin. Unfortunately, that’s difficult to nail down. What is Price Realization, and How Does It Impact Your Bottom Line?

15. 15 Different markets, customers, channels, and products all require different pricing strategies. When you start mixing and matching between them, things get even more complicated. What is Price Realization, and How Does It Impact Your Bottom Line?

16. 16 Evaluate your transactions for the past year. Segment your deals and customers into the smallest groups possible. Build custom prices for each of these segments, further segmented by situation, if possible. What is Price Realization, and How Does It Impact Your Bottom Line? How to Build a Pricing Cheat Sheet:

17. 17 4 . Increase Your Prices Yes, it seems counter-intuitive. But you wouldn’t believe how many businesses underprice their products and services! What is Price Realization, and How Does It Impact Your Bottom Line?

18. 18 You should increase prices on a regular basis. It seems scary, but as long as you continue to drive value and sell on that value, your customers will understand. What is Price Realization, and How Does It Impact Your Bottom Line?

19. 19 Start with products with least price resistance. Price for the entire package, all value propositions included. Keep increases realistic. A 1% increase makes a big difference in profits. Give your customers fair warning. Don’t just roll out a price increase. What is Price Realization, and How Does It Impact Your Bottom Line? How to Successfully Increase Your Prices:

20. 20 5. Measure Regularly Achieving price realization is an ongoing effort . Monitor the differences between your target and actual prices on an ongoing basis. What is Price Realization, and How Does It Impact Your Bottom Line?

21. 21 Here are a few sales reports to consider: What is Price Realization, and How Does It Impact Your Bottom Line? Actual period over period price realization Number of discounts given out and monetary amount of margin lost through these discounts Value decreases on deals and success rate for these value decreases Overall margin lost through price concessions

22. 22 Here are a few finance reports to consider: What is Price Realization, and How Does It Impact Your Bottom Line? 1. Disparity between actual and target prices by a. Sales rep b. Product c. Channel d. Customer segment 2. Margin losses and gained as a result of the new price realization strategies

23. 23 Achieve Price Realization with Faster Data Analysis Stop torturing your team with more reporting. Put your data to work with an efficient analytics application instead. What is Price Realization, and How Does It Impact Your Bottom Line?

24. 24 KiniMetrix helps companies align pricing metrics and build profits and growth. Analyze your prices accurately and easily across customer, market, products, sales reps, and other criteria. Click here to see how KiniMetrix can do this for you. What is Price Realization, and How Does It Impact Your Bottom Line?