Spotlight on Pricing with George Stelling

Spotlight on Pricing with George Stelling

As an executive and private investor, George Stelling has helped many struggling businesses improve their gross margins and profits. During his career, George has developed innovative pricing strategies, managed and restructured pricing organizations, and changed the fundamental tenants of pricing tactics management in technology and consumer companies. “Companies that undertake price-management improvement programs with a point of view that understanding price elasticity differently typically see between a 3 to 5 percent improvement in profits after eighteen months,” he says. Like many people’s personal cash flow controls, small changes in the management of pricing processes, policies, and strategies can make a huge difference in profits. The balance of supply and demand is sensitive — a decrease in price will expand demand and an increase in price will chase away customers. But the key is to segment your customers based on their willingness to pay for a certain product or service and to test various pricing methods and tactics. “Segmenting customers based on what they’re willing to pay,” says Stelling, “can be a powerful way to improve profitability in any business.” Understanding what the customer will pay The first step toward improving profits using price management is to understand what customers are willing to pay for a product or service and why they buy. In addition, it is critically important to analyze pricing variability, as you will often find that discounts, whether in the form of upfront price reductions or back-end rebates, influence a customer’s willingness to buy a product. “Understanding this ‘pocket margin’ — the real amount of money a company makes on a product or services after all discounts,...
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