Pricing Strategy
Whether you are running a production facility, service business or trade, understanding your cost structure is key to making good business decisions and setting targets. Without this knowledge you can easily underprice and leave value on the table, or invest time and money in a venture only to find that the anticipated payoff doesn’t eventuate.
Consider the following questions:-
How much does it cost to provide your services?
Is one part of your business subsidising another?
How much income do you have to bring in to cover your running costs or to make a certain profit at year end?
If you can’t confidently answer these questions, we can provide the clarity you need.
Our approach is to work through your operations and expenses to map out which activities drive costs directly, and which are overheads. We then look at how overheads should be applied to your products or services and what this means for your profitability and pricing strategy.
We can offer service packages in the following areas:-
Pricing Assessment
Review of operations, cost structure and reporting systems and provide recommendations for changes or improvements
Assess current profit margins on products and services
Perform break-even point and profit modelling
Benchmark your cost structure to your industry
Estimating
Assistance with estimating costs and quoting for products, services, tenders or other project work
System Improvement
Improving the way data is collected to extract the information needed to analyse your operations
Creating calculators and tools to help determine costs for quoting
Implementing procedures to reduce or limit costs
Cost Accounting
Project cost tracking
Job cost tracking
Activity-based costing
Pricing can be determined following an initial meeting to understand your business and unique requirements.
We have many years' experience analysing business structures and estimating costs for our broad client base, as well as experts who have performed cost accounting and estimating for large commercial building projects and manufacturing facilities. Through this experience we are well placed to assist with your requirements in this area.
The following case study illustrates the benefits of reviewing your pricing and cost structure.
Case Study – Pricing Strategy
This housing business had a new product offering in the housing industry and quoting systems had been developed in a gradual manner as new projects were taken on. These systems focused primarily around direct material costs, estimates of labour costs and adding expected profit margins.