What’s Your PQ (Pricing Quotient)?

Whether you sell a product or service, the price you charge your customer has a direct impact on revenues and profits. Do you think your organization has pricing under control? Take this quiz to determine your Pricing Quotient (PQ). For each item, please check one box. When you are done, hit “Submit” for an immediate analysis of your PQ.

Pricing Quiz

1.  A company’s primary pricing purpose should be to:

Close deals
Increase profits
Cover costs
Advertise special offers

2.  Prices are primarily determined by:

What a customer is willing to pay
The value of the offering, the relevant costs, and the competitive environment
Whatever the market will bear
The competition’s price

3.  A pricing strategy:

Should increase revenue
Must cover costs
Is either skim, penetration or neutral
Must reduce inventory

4.  An organization’s pricing strategy should be understood by:

The product and pricing managers
Sales and marketing professionals
Senior executives
All

5.  When a competitor changes its prices, your best response is to:

Do nothing
Lower your price to match the competitor’s
Lower your price so it’s below the competitor’s
Understand their reasoning and consider your options

6.  The customer:

Is always right
Is always powerful
Determines value
Is ignorant

7.  Successful pricing should:

Come from a range of low- to high-value offerings
Include quantifiable value propositions that define value for individual customers
Capture a fair share of the value the product generates for the customer
All of the above

8.  What is the best description of value-based pricing?

A method of pricing products in which companies first try to determine how much the products are worth to their customers
A variety of data mining
An approach to analyzing an offering’s benefits
An element of a customer’s buying decision

9.  The main benefit of penetration pricing is to:

Establish long term price expectations for the product
Create positive impressions for the brand and company
Leverage high growth markets
Attracts bargain hunters

10.  Which of the following is not a critical driver of an organization’s pricing strategy?

The value of the offering relative to the competition
An understanding of where the offering is in the life cycle
Appreciation of industry economics
Success in communicating the cost basis of the product or service to the prospect

11.  One attribute true of elastic demand is:

A price drop results in a dramatic increase in the quantity demanded by consumers
Goods and services for which no substitutes exist are generally elastic
Elastic demand is commonly associated with "necessities"
Consumer perception is a poor predictor of demand for elastic products

12.  Discounting is a successful pricing approach if it is offered:

To the smallest customers
To all customers
On services that support commodity products
On products that deliver fewer features and a lower cost-basis

13.  The first step in determining pricing tactics is to:

Determine the fully loaded cost of the offering
Find out what the competition is doing
Offer a special promotion to see if customers want to buy it
Train the sales force on the product features

14.   When a customer promises future business in exchange for a discount that means selling the product below cost and says “take it or leave it,” your best response is:

Ignore the demand
Take the deal and make it up in volume
Meet the demand
Let the competition get the business

15.  Once the cost of supporting customers is taken into account, what percentage of customers are very profitable?

10%
20%
50%
75%

16.  Firing a customer who makes unreasonable pricing demands:

Increases profits in the long run
Sends a signal to sales people and customers that you have a pricing strategy that you will stand by
Frees up selling and service resources to pursue profitable customers
All of the above

17.  Of the following, which one is not a recognized pricing tactic?

Discounting
Rebates and marketing development funds
Value/price trade-offs
Manufacturing efficiency

18.  What are the best guidelines for responding to RFPs?

Respond to all of them
Respond to none
Respond to those where you have an executive relationship
Don’t respond to those you have a very low chance of winning

19.  The account planning process is important for determining:

What solution will be offered to a customer
What price should be offered based on buying behavior
What negotiation tactics we will take before meeting with the customer
All of the Above

20.  When bundling products for a solution, companies should:

Give the services away for free
Price the solution higher than the component offerings
Price the solution lower than the component offerings
Price the solution equal to the component offerings




About the Book.

With ten simple rules, PRICING WITH CONFIDENCE demonstrates how managers can deliver both healthy profit margins and robust revenue growth while kicking their dreaded discounting habit. It’s a simple matter of linking the prices you charge to the value you deliver so your company can customize offerings for various types of buyers and differentiate your products from the competition.

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