NOVEL SOLUTIONS
Raising Prices, Profi t and Prosperity D
SHANNON WETZEL, SENIOR EDITOR
an Kennedy is rich, and he wants you to be rich, too. In his latest book, No B.S. Price Strategy, co-written with Jason Marrs, Kennedy urges
business owners to improve their personal wealth by set- ting bold prices that ensure generous profi ts. Many of the specific examples in the book are
consumer-oriented, so metalcasters will have to stretch their imaginations to see how to apply them to the casting industry. But the general principles behind Kennedy and Marrs’ pricing strategies are worth ex- amining. The authors preach that low prices cannot be maintained forever and some people are willing to pay more for better value. The objective is to market to the specific niche of people or companies that will pay more for the extra value you add to your casting services. One of the most eye-opening sections of No B.S.
Price Strategy takes a mathematical look at how rising sales can decrease price. Kennedy offers three scenarios where a higher volume of sales will result in your company losing money: 1. He shows that cutting price $5 to increase sales can shrink the gross margin from 35% to 32%.
2. He shows how failing to raise the price when costs go up decreases the gross margin to 30%.
3. He proves raising price only by the amount of the cost increase results in a 33% margin (versus 35%). According to Kennedy, you should raise your price by the same percentage as the cost increase to main- tain your margin. “You can aff ord to lose a shockingly, mind-bending amount of volume and still make as much net money from minor price increases that drive away a quantity of customers,” Kennedy writes. T e better profi t margin from higher prices from an
optimized group of customers will make up for a decrease in the number of sales. Kennedy offers several examples of companies
that are successfully charging two, three and 10 times more than similar businesses because they found a group of potential customers that fits their specific values and services. The book’s No B.S. title is not just a cute phrase—it means what it says. The book’s tagline, “The ultimate no holds barred kick butt take no prisoners guide to profits, power and prosperity,” gives you a clue to its tone. The authors take a frank look at building profit through better pricing, and while all the methods outlined are legal, some are slicker than others, such as padding shipping and handling and sneaking in new fees for services that once were free. In the end, Kennedy and Marrs’ goal is to help you
make more money, and at the very least the book will have you thinking twice before setting a price.
“T is must be your goal: escape apples to apples. Searching for your One Little T ing is a very big thing.”
Metalcaster’s Translation: If you allow your customers to compare your costs on a casting vs. casting basis against your competitors, you will be forced to compete on price. Instead, add additional value to your casting through in- house machining, assembly, better lead times, economi- cal packaging and design services.
September 2011 MODERN CASTING | 49 ABRIDGED
Relevance to Metalcasters Technical Diffi culty Self-Help Fluff Profi t Booster
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