There are three key strategies to pricing anything, writes Michael Stanisz. All three apply to B2B, B2C, a product or a service:
- Cost-based or cost-plus pricing. Note, this includes margin and markup methods.
- Market-based pricing. Note, minimum MSRP guidance plays a role here.
- Value-based pricing.
Pricing challenges are frequently discussed when animal health pros get together. Regional differences, client demographics and local competition influence which method to use for what is being priced. Identifying and assigning fixed costs to any of three is problematic.
The unit cost of a SKU found on an invoice is never its true cost of goods sold”- Kirk Augustine
Source: MDM, September 13, 2021. Link.
INSIGHTS: Now is a good time to review how pricing is calculated or determined and to update system settings. The holiday rush is here and making changes while trying to complete an annual full inventory is not the time to review pricing. Consider engaging accountants now to determine how best to assign fixed costs.