Pricing to Improve Profit Margins

1
Pricing to ImproveProfit Margins

• Lifelong Learning 2008Presented by Phil Whatley

2
Market PricingNot Formula Pricing

• Formula
• Competition
• Payment Trends

3
Listing Your Prices

• Do not put decimals and zeros after the price.
• Avoid round numbers.
• Use 5s and 9s.
• Dont highlight, and dont hide, your price.

4
Clustered Diversified Pricing

• It is better to diversify and not cluster your
  prices because a spread in prices markets to
  different audiences.

• Clustered Pricing

Diversified Pricing
5
Price Breaks for Community Courses/Events

• A price break is the point at which a person
  says the price is too high.

• 10
• 15
• 20
• 25
• 30
• 35

40 50 60 75 80 100
125 150 200 300 400 500
600 700 800 900 1,000
6
Price Breaks for CPE, Seminars, etc.

• 50
• 100
• 125
• 200
• 250
• 300

400 500 600 700 800 900
1,000 1,200 1,300 1,500 1,800 2,000
Up by 1,000
7
Market Pricing

• Production Costs 400
• Projected Production Percentage 40
• Income Goal 1,000
• Projected Participants 10
• Formula Price 100
• Review Competition and Customer Payment
  Trends
  
• Price Options 95 or 125

8
How Much to Increase Prices

• Price Increase What To Do
• 0 - 14 Do It/Price Break
• 15 - 24 Test
• 25 - 49 New Features
• 50 New Activity

9
The Impact of Pricing on Attendance
Attendance
Dollar Income
of Dollars\Attendees
Increase in Price
10
When to Lower Prices

• To get off a price break
• To reach another type of audience
• If the economics dictate
• If your expenses decline significantly

11
Pricing Strategies

• Segment the market.
• Diversify programs.
• Discounts for multiple registrations.
• Repeat participation.
• Diversify your prices.

12
The Competition

• Price just under the competition and stress your
  cheaper prices in promotion and in your
  marketing.
  
• Price higher than your competition and stress the
  quality of your programming in your promotion and
  marketing.

13
The Competition

• Price at the same level as the competition, and
  rely on your programs other factors, such as
  time, content, location, and instructors, to
  differentiate your program from others.

14
Opportunity Costs
Margin
Promotion
Costs
Production
Development
Number of Participants Needed
15
Other Value-Up Strategies

• Promote the qualities of your speakers.
• Have speakers call a few key registrants for
  issues, concerns and items they want covered.
  
• Offer and promote structured discussion and
  networking opportunities.
  
• Increase the quality and knownessof your
  speakers.

16

• Offer speakers that normally would not speak to
  groups like yours but that bring an important
  message/perspective.
  
• Include and promote valuable, practical materials
  usable after the program.
  
• Include follow-up consultation.
• Include pre-program study material.

17
How to Sell Your Price Increase

• When raising the price, raise only one digit of
  the price.
  
• If you are attempting to substantially raise your
  prices, do one major price increase rather than
  constantly raising prices every year.
  
• Do a better brochure.

18

• Add refreshments or other little touches to your
  course/event.
  
• Add an outside speaker.
• Include more paper, such as booklets or
  handouts.
  
• Make the course/event longer.
• Add activities that will be perceived as having
  greater value than the cost to you.

19
Thank You!