Kevin Mitchell is the President of the Professional Pricing Society (PPS). He is the publisher of a quarterly journal on professional pricing, which is primarily academic research. He also publishes a monthly newsletter, called the Pricing Advisor, which follows trends in pricing. He has spoken all over the world on pricing, including North America, South America, Europe, and Asia.
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Professional Pricing Society
- What is the most important thing you can share about pricing?
- Businesses worldwide understand that the best lever they have to increase their profits is pricing knowledge and management.
- Having great services and products that are well-promoted does not make a business profitable if they are priced wrong.
- A company's products and services need to provide great value to its customer base.
- Pricing allows you to be compensated fairly for the created value and permits you to reinvest in your company, community, and employees.
- Pricing is the best lever to improve a firm's profitability.
- A 1% increase in price can result in a 10% increase in the bottom line, as referenced in The Price Advantage.
- What is the Professional Pricing Society?
- It is the membership organization for pricing professionals and enthusiasts worldwide.
- It was founded in 1984 by a pricing professional, Eric Mitchell, Kevin's father.
- What does PPS offer for knowledge professionals?
- Some members have pricing in their title for an organization; others are sole proprietors, sales people, and marketers who are pricing thinkers.
- Resources are available to help measure how your company is performing as a pricing organization.
- There is a lot that happens in business that is not pricing, but involves pricing decisions.
Basic Pricing Concepts
- What are the three most important pricing concepts?
- Prices are stickier when they go up, rather than down.
- Discounts might be permanent in your customers' eyes.
- Your customers live in the same connectivity era that you do; they can research pricing too.
- The price you provide for a product/service is often the first indicator of quality for that offering.
- Does a commodity exist in professional services?
- There are certain individuals within the pricing discipline, like Ron Baker, who say there is no such thing as a true commodity.
- Think about the goods and services from the perspective of your customer.
- As an accountant, there is usually a reason you select by your customer.
- There is a value to being in business a while, in being close by, in being available to your customers.
- Downtime to the customer can be a very expensive consideration as well.
- Where is the opportunity to differentiate in professional services?
- Perceived commoditized services can offer different benefits:
- Number of years in business
- Referrals from others
- Professionalism surrounding the service
- Ease of use
- Flexibility
- Switching costs are also something to consider from the customer's perspective.
- Ask your customers what is valuable to them, “Help me help you.”
- The conversation can be very simple and very straightforward.
- Many business professionals think inward, rather than using soft-selling skills to think outward.
- If you show an interest in the customer's perspective and demonstrate that you understand it, you have an opportunity to sell a service to make things go smoothly for the customer.
- Start the discussion and let your customers know there is empathy.
- The extra connection to understand a customer's business allows you to provide more value.
- Perceived commoditized services can offer different benefits:
Pricing Trends in Professional Services
- What are some pricing trends influencing professional services?
- Most of the trends are analytic and psychological.
- There is a quantitative and qualitative side to human beings.
- Pricing must appeal to both sides of the brain.
- Consumer nature and irrational behavior by customers are being studied right now.
- There are situations where humans are not completely rational.
- Pricers who sell to other businesses have done cost-plus pricing in the past.
- People are figuring out that the customer doesn't care about what your cost is; they just want it to work.
- Businesses are looking at what their customers gain from doing business with them.
- If you have a hardware store, you need to remember that your customer doesn't want a drill, he wants the holes.
- Do business on your customers' terms and get compensated for the value.
- What is one of your best stories about creating value?
- A man worked in a paper mill (old economy) in a small town.
- He had a junior pricing professional who found that his company didn't have to raise prices to improve.
- Instead, they had been over discounting and not requesting the real value they were providing for years.
- The discounting issues were generational in nature and were often unearned as the customers weren't doing what was needed to earn the discount.
- They didn't raise prices but removed the unearned discount.
- They were able to save one of the paper mill plants, based on removing discounts.
About Kevin Mitchell
- Website: pricingsociety.com
- Email: kevin@pricingsociety.com
- Twitter: @PricingSociety
Why do parents and stores behave this way? The answer is in the laws of supply and demand. Together, these laws give us strong clues about what to produce, how much to produce, and how much to charge. Because supply and demand play such a central role in our economy, it’s important to understand how they operate and how you can use them to analyze decisions about price and quantity.