Partner Article

Priced to sell

Phil Bird, CEO of enterprise auction platform Perfect Channel explains how, when it comes to selling, auctions can help businesses achieve maximum value.

The pricing of a product or service may ultimately define the success or failure of a business.

But how do you set your prices? Historically businesses resort to fixed pricing - researching the competition and the marketplace, a figure is created, leaving little or no room for negotiation.

The question we need to ask ourselves when setting up a business is, ‘what is the consumer prepared to pay?’ Proper pricing is central to success - too high and you’ll alienate people who are not prepared to pay and too low and your business model will not generate sufficient profit margins.

With the current climate so unstable for many, it is vital that businesses identify the true market value of their product.

Finding the true market value, or what we call ‘Perfect Pricing’ no longer has to rely on fixed pricing.

Businesses are beginning to successfully explore alternative pricing mechanisms. We’ve seen this to an extent with airlines. When it comes to buying a cheap seat on a flight, get in early, and you’ll most likely get the best deal. As supply goes down and demand up, you’ll have to pay more. Known as dynamic pricing, this is a pricing model that consumers understand and many businesses now use this mechanism to maximise the value of their sales. But take this a step further and businesses are now maximising the value of their goods and services via online enterprise auctions.

Put simply, enterprise auctions allow businesses to sell for the maximum value to the buyer prepared to pay the most. In the current climate, where businesses are under increased pressure to deliver more and generate better value, auction technology is emerging as the ideal mechanism for pricing goods or services appropriately. Sellers have the ultimate reassurance that they are reaching the widest possible markets and getting the best price, while buyers have an opportunity to contribute and pay what they believe something is truly worth.

The live online auction market globally is already exceeding $1 trillion. Enterprise auctions have a range of applications and are being used by businesses in many ways to maximise profit and efficiencies, such as:

• Selling off depreciating assets like consumer tech products or fashion – the shelf-life of a mobile phone at retail today is typically four months. Three years ago, it was 9 to 12 months. For most retailers, stock quickly changes from high value inventory to ageing stock tying up capital and dropping in value. Auctions allow businesses to sell off stock fast, in relevant amounts to the highest bidder.
• Opening up markets around the world for the sale of artworks – auction houses are turning to online auctions to transcend geographical and time barriers. Making an auction accessible anywhere around the world means more bidders, and ultimately a greater sale value.
• Financial services organisations are looking at auctions to rebalance their underwriting capacity or sell off financial products – anything can be sold through auctions – be that mortgages, loans or other accounts – and auctions provide the compliance and transparency which is becoming increasingly important in this sector.
• Building brand loyalty through repeat visits. As an auction requires multiple visits many organisations are utilising special auctions – offering unique deals to customers - celebrity meet and greets or VIP tickets – to build better relationships with fans, members or customers.

Ultimately, technology is playing its part in what we have been doing for years – bartering - but it also provides businesses with new benefits in a global market. As the saying goes, ‘something is only worth what someone is willing to pay for it’ and nowhere is this more true than the world of enterprise auctions.

This was posted in Bdaily's Members' News section by Perfect Channel .