Generating profit is a pretty straightforward recipe - the key ingredients of profit, as we know, are price, volume and cost. Sadly, while the recipe is quite simple, putting the right amount of each ingredient into your mixing bowl is usually where the problems creep in and can leave you with a soggy bottom line.
When times are leaner, or ‘uncertain’ as seems to be the description that is very much in vogue at the moment, business leaders all too often spend a lot more of their energy on addressing the costs in their businesses. At times business owners may also be tempted to rush towards volume in the belief that doing more will make them more.
It turns out though, that the best way to turn up the heat in order to increase your profit is to understand much better the role that pricing plays.
Price cutting or setting your product or service prices too low means you have to gain massively more accounts to maintain an acceptable level of profit – way out of proportion to what you would ever imagine.
Not only does that sound exhausting, but of course it also means that you have add to your overheads with a bigger team. Adding staff resource is especially impactful on agency-type businesses as any agency leader will tell you. And let's be honest, how often does recruitment go wrong, or take along time to get right.
To help you to understand how pricing your pitches impacts on the success of your business, I recently asked one of the UK’s foremost thinkers on pricing strategy – Paul Williamson – to apply his knowledge to the marketing agency world.
Paul was the lead on the pricing for the London 2012 Olympics, which achieved over £600million of tickets sales, literally hundreds of millions ahead of target and he will be sharing his insights on pricing in the marketing sector at Pitch Perfect, The Drum's one day conference focused on the acquisition of new business for agencies.
If you think that there is any way you could improve how you price your services, please secure your place at Pitch Perfect, which rakes place on 28 September, today by clicking here.