The report, called The power of pricing, included a survey of over 500 companies worldwide and highlighted trends in how companies set prices.
More than 40% of respondents considered pricing to be the most effective way of growing profitability. However, only 26% believed that increased prices would drive profits over the next three years. A significant portion (17%) also believed that profits will decline, along with their prices.
The results showed that 60% of respondents adopted the most basic approaches to setting prices too, such as matching competitor prices and applying a fixed mark-up to costs. More sophisticated approaches such as pricing based on customer willingness to pay were less common.
“The greatest challenge for companies is to understand where they generate real value and to reflect this in their pricing,” said Nazanin Naini, PwC senior consultant. “Many companies claim to be customer-centric, yet understanding what customers really value is one of the most commonly stated challenges, with only 13% of our survey respondents telling us they have deep insight into their customers’ willingness to pay.”
Source: PricewaterhouseCoopers
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