What’s your pricing strategy? Do you have one…or do you throw together your proposals the same way every time? In today’s highly competitive marketplace, a flexible pricing strategy will most often result in maximizing your profit. The question is, “What is a flexible pricing strategy?”

There are three basic pricing strategies.

1. Pure Price Strategy – Here you attempt to get the work by having the lowest bid. This strategy can produce profits if your company has a highly skilled and efficient labor force and complete control over all other cost centers, including material, equipment, subcontractors, overhead, etc.

2. Value Pricing Strategy – This means you are not competing for work as the low bidder. To profit with this strategy, you must possess the ability to sell value over price. In this arena, quality craftsmanship, good marketing and professional sales skills will land you in the profit zone.

3. Flex Strategy – To succeed in this arena, you must have up-to-date financial information regarding your company. You must know your company’s capacity to produce work. You must know your break-even point, cash flow position, job costs and work-in-progress. Most important, you must know your profit position relative to your annual budget.

With this information in hand, you can then choose to go to market with either the Pure Price or the Value Pricing model. If you really want to land a desirable job, you have the knowledge to submit a low bid knowing you won’t lose if awarded the project. Or, depending upon the situation, your approach could be to price it with “value” because you know exactly where your company stands relative to its annual profit goals!

Pricing strategies will be covered in detail during Ewing’s upcoming Business Development Workshop – 101 Ways to Sharpen Your Competitive Edge. For more information regarding Ewing’s educational classes, go to www.ewingeducationservices.com.