In [[The Personal MBA]] //''pricing power''// is your ability to raise the prices you are charging over time. The less value you are capturing, the greater your pricing power. Pricing power is related to [[Price Elasticity]]. If customers are very sensitive to the price of your offer, you'll loose many customers with even a slight increase in price, meaning it's demand is 'elastic'.

!Key Points:
* Pricing Power is your ability to raise your prices over time. The less value you capture, the greater your pricing power. It’s related to the economic concept of “price elasticity”: how sensitive are your customers to price variations.
* Pricing Power is important because raising your prices allows you to overcome inflation or increased costs. without pricing power, your business may not be able to remain alive if it faces higher expenses.
* The higher the prices you can command, the more reliably you’ll be able to maintain [[Sufficiency]].

!Questions for Consideration:
* How sensitive are your customers to price increases?
* Would raising your prices make it easier for your business to stay sufficient?
* How much room do you have to raise prices without losing too many customers?

Source: http://book.personalmba.com/pricing-power/
bag
mbi_public
created
Sat, 14 May 2011 14:44:04 GMT
creator
dirkjan
modified
Sat, 14 May 2011 14:44:04 GMT
modifier
dirkjan
tags
The Personal MBA
creator
dirkjan