Pricing & Profits: It’s Not All About RevenueArticle by Lisa Anderson, June 23, 2019
According to CFO Magazine, Amazon’s profit doubled to a record $3.6 billion in the first quarter yet reported its lowest growth rate in quarterly revenue since 2015. In today’s Amazonian environment, subscription services such as Amazon cloud and Kindle services as well as disruptive forces such as the 3rd party seller services (clients worry about from the opposite viewpoint) are driving profitable growth for a company that once lost money continuously. Are you considering ways to ensure your pricing makes sense and delivers the results you intend?
It’s Not All About Revenue
Ask questions of your sales representatives, customers, marketing department, executives and competitors about pricing:
- When is the last time you raised prices? Why are they at the level they are set?
- Who sets your prices? Think carefully as this could lead to some interesting discussions.
- Do you know how your prices compare to your costs? There are lots of reasons NOT to set prices this way but knowing this relationship is relevant.
- How does your pricing stack up with the competition? Again, high or low is irrelevant but considering your strategy is key.
- Since it has come up frequently lately, I’ll also throw in this one: Is your pricing so complex that your ERP system won’t support it? That would certainly be something to re-evaluate.
Pricing is an important topic, assuming you are interested in profitable growth. It is worth taking the time to ask a few key questions of your internal and external resources. Gather your executive team and put some focus on whether what you are doing makes sense and supports your strategy or if it is out of date. With the pace of change at an all-time high, reviewing this topic once every few years is by NO MEANS enough. If you’d like an expert to assess your situation to partner with you to achieve these types of results, contact us.
Tags: Amazon, CFO Magazine, cost, early bird prices, people, profit