Pricing Power “Pricing Elasticity”
a. Ability to Raise Prices over time.
i. More you earn per customer-better your business.
i. Customer price sensitive to your value for charging more in ranges.
c. Requires Norms needing pricing experimentation affecting your sufficiency.
"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