Let's Talk Pricing Podcast
Rethinking Cost-Plus: The Journey to Market-Based Pricing
Sep 12, 2023
This podcast discusses the challenges of pricing spare parts for machine manufacturers and the limitations of traditional pricing models. It explains the advantages of market-based pricing, including maintaining profitability and incentivizing innovation. The podcast also explores the benefits of market-based pricing in a dynamic industry and the challenges of implementing it. It emphasizes the importance of data collection, access to information, and alignment with customer needs in successful pricing strategies.
19:59
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Quick takeaways
- Market based pricing helps manufacturers capture maximum value from each component sold and predicts shifts in the market and customer needs.
- Market based pricing differs from cost plus pricing by setting prices based on market demand, allowing for flexibility and agility in adjusting prices according to market shifts.
Deep dives
Benefits of Market Based Pricing for Manufacturers
Market based pricing helps machine manufacturers stay competitive and maintain profitability. It reflects real-time value by aligning pricing with market demand and what customers are willing to pay. It also enables manufacturers to respond to competition by staying informed about competitor pricing. The primary benefit is that market based pricing drives profitability by capturing maximum value from each component sold. Additionally, it incentivizes innovation and helps predict shifts in the market and customer needs.
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