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Sales, Marketing & Growth

Fact Based Pricing - How to maintain a healthy pricing strategy

To improve profitability, companies can utilize pricing models to shift customer demand to become aligned with core operational processes.
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Overview​

When sales volumes are down, price becomes the only revenue-lever that companies can address to maintain profits. While the thought of price changes can be overwhelming to many businesses, when approached correctly, price manipulations can have a significant impact on companies’ bottom-line. Changes in price should not be made without careful consideration. If poorly executed, unthoughtful pricing changes can do more harm than good to a company’s performance. However, a fact-based approach can address concerns about price adjustments while enabling sustainable and profitable growth.
Historically, the most common strategies are market-based, value-based, and cost-based pricing. While market-based pricing sets prices by aligning them with similar products on the market, value-based pricing determines price based on perceived value for the customer. Cost-based pricing, where companies’ influence is greatest, is set based on a determined mark-up. Applied Value’s fact-based pricing draws from the best parts of all of these methods to secure profitability on all products, whether standard or customized. To achieve this end, fact-based pricing requires taking a multidimensional view on both cost and value.

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