price it right to thrive!
In this insight’s session, hosted by Shaheryar Idrees, we had the privilege of speaking with Hammad Kabir. He currently leads Seller Revenue and Pricing Strategy for Amazon at their European Headquarters and has spent a combined 28 years within the technology and telecommunication sector with companies like Telenor & Orascom Group. Based on his experience and extensive exposure, Hammad was able to share information on best practices in pricing applicable across multiple industries. In addition to this, he also touched on how businesses are dealing with COVID-19 and key learnings from this crisis.
The first most important factor Hammad conveyed was that pricing itself is not just about monetization or a tool to put value to a good or service that you provide. There are many crucial points to take into consideration such as; how rare or important your goods or services are, what price are customers willing to pay? How great is your product and price point compared to your competition? Is it an economical price point in the market share? Constructing a price structure should mostly be perceived as adding value as opposed to putting value to it. Selling points of goods and services is more than just putting out a product for the sake of it — there is an entire method to the madness.
The second point he focused on was avoiding shortcuts, there is a financial trend of lowering prices based on a product or service not performing well. In this case the wise decision would be to see what is wrong with the product as opposed to fidgeting with its price. Avoid discounts and death traps (struggling to ensure your sales go up by lower pricing points). For example, it would be unwise to decide on a discount just to lure customers in to increase the customer base as opposed to evaluating if a certain product or service should be on discount. These unplanned strategies become like steroids and cause high dependency and businesses in many cases are unable to break out of them.
The third point addresses knowing your costs, it is a simple and easy concept but difficult to implement and stick to in the long run. Most organisations and business models leave this to their finance department to figure out as opposed to viewing it as a collective analysis. For instance, increasing your price is an easy way out but when circumstances change and the time comes to reduce costs, everything dramatically shifts and requires a lot of extra hard work. It is also necessary to view reversible and irreversible decisions which are crucial when sales trends are being considered.
Lastly, it is prudent to always consider trial and testing before jumping to conclusions especially in regard to pricing. However, nothing is more accurate than the customer response to the pricing itself. Pricing is the constitution of your business and what you have set out to do. It is easy to put a price tag on something but very difficult to assess worth with regards to it.
To watch our full session on our YouTube channel, click here!
