Are you selling the right Product Mix?
Before one can really answer that question, One must step back and explore the holistic nature of business. Your business.
I preach that business "templates" are just wrong. In 80% of the cases where they are used. Business is dynamic. My business is different from your business. In a past life in the retail flooring business, (as Operations Manager) I preached that we were the market leader.
I preached it to the staff. To my suppliers. On the rare occasion that I interacted with a customer, yep, you guessed it: I preached it to them too! More importantly, I preached it to myself. The only problem was that most people felt that an older (more established) business with more locations was the market leader.
Right up to the day when they closed the doors.
Out of Business
First pricing lesson to learn: You decide your fate. Not your competition. In this family flooring business where I worked for a year, part of our mission statement was a simple statement that we would not (I repeat) not be the low cost provider.
As I have shared before, when I was buying parts for a motorcycle that I bought wrecked, I asked the salesman a simple question: "Is that your best price?" His reply was classic...
"Yes."
Hawaii Mike went on to say that it was his best price, "If you want me to be in business next time you need me." That is what the buyer of that now defunct flooring business did not understand.
Do you?
Eli Goldratt is human. (Me too.) His use of templates might work for him, but they are dangerous in the hands of those less brilliant. Where he preaches "stock answers", I preach dynamic adaptations of those templates. Take his brilliant P&Q Example.
If you want to figure out the absolute best pricing model for your business, you must understand P&Q. Right now, follow this link, and print out the example, then work it out on paper.
Seriously
Until you "get it" (the lesson of P&Q) you cannot change. As Goldratt is found of saying, there is no inherent resistance to change. I agree. His perfect example: the lottery. If you hit the mega millions tonight, you will change your entire life tomorrow. Well okay, 99% of us would. The challenge is that you do not see "pricing" as important as winning the lottery. If you did, you would want to explore the best approaches to pricing in order to make more money.
Happy with Status Quo? Then I am probably not a good source of reading material.
Lets call this post, Part I
Until you stop what you are doing, and work through this example, no one can help you. It is that simple. Oh, is that too direct for you? Sorry.
Life is too short.
Jeff 'SKI' Kinsey, Jonah
Throughput.us LLC
(330) 432-3533
P.S. If you really are seeking results...
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