What is Price Optimisation?

Price optimisation is the process of finding that pricing sweet spot, or maximising price against the customers willingness to pay.

Companies up and down the supply chain, both in B2B and B2C settings, rightly dedicate a massive amount of time towards price optimisation to ensure that their products will sell quickly at the right price while still making a decent profit.

If an item is priced too high, it may not sell at all, while if the price is reduced too much, the business will not make a profit.

Businesses use a price optimisation formula based on the overall demand for their product, their level of competition, and (in the case of manufacturers) the cost of manufacturing their goods. 

Finding the perfect balance between profit and value is essentially what price optimisation is all about, and because the relative values of goods and services constantly change, this is a never-ending task for most businesses.

Few decisions have as large an impact on the success of your business as optimising prices.

Your prices influence how many customers actually purchase your products, how your product is perceived, the types of customers you attract - and sales revenue. This all has a direct effect on your profit margins.

Every pricing decision you make should offer a win-win outcome where your customers get good value for their money and your business makes a healthy profit. 

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