Pricing Strategies And The Perceptions That Drive Them

Abstract

In order to survive, let alone grow, a practice has to attract and retain loyal customers. A loyal customer is one who has a positive attitude about the practice, who buys frequently and who recommends the practice to friends and colleges. It costs more to acquire new customers than to retain current customers. This means loyal customers generate more profits each year they are retained. Given that successful practices typically see 80% of their income come from just 20% of their customers, it is vital that we learn to focus on customer loyalty especially with our top customers. One of the three key determinates of customer loyalty is the total cost of using a practice’s products or services. Customers will buy from the practice they see as offering the highest perceived value. Customer perceived value, or CPV, is the difference between the customers’ perceived benefit derived from using a company’s product or service and the total costs of purchasing that product or service. Therefore, pricing and other financial techniques can play a significant role in the customer’s perceived value and, ultimately, are a key factor in practice profitability.