It is the ability to raise the prices
you are charging for the value that you are offering & the effect of that
on your customers
It answers the question: how much can
I increase the prices before customers feel that the value isn’t worth that
money and start to flee away
-
For example: if I double the pricing, will I lose half
or more of my customers so that the net total is financial loss?
-
Notice that it is not always about money, you may lose
the exact half (in the previous question, and that would be profitable to you
in terms of time, energy and employees' salaries
The more pricing power you have, the
more flexible you can be and the more you can maintain sufficient and resilient
to market changes.
Also it is a great indicator of your
weight in the market among your competitors
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