Pricing Power

Pricing Power

Pricing Power “Pricing Elasticity”

a.     Ability to Raise Prices over time.

               i.     More you earn per customer-better your business.

b.     Elasticity

                         i.     Customer price sensitive to your value for charging more in ranges.

c.      Requires Norms needing pricing experimentation affecting your sufficiency.

Lifetime Value

"The purpose of a sale is to get a customer."

-Bill Glazer Advert Expert

1.     Value of customers business over the lifetime of the their relationship to your company.

a.     Subscriptions; maximize lifetime value and the Allowable Acquisition Cost (AAC).

                   i.     First understand the lifetime value of a prospect.

             ii.     Calculate the maximum amount of time and resources you’re willing to spend to acquire a new prospect.

1.     Win a subscription; recurring product for recurring payment

a.     Average Customer Lifetime Value - Value Stream (Cost to Deliver Product Over Time) – Overhead / (Total Customer Base) Fixed Costs; X 1 – Desired Profit Margin= Allowable Acquisition Cost