Are You Leaving Money on the Table? 🤔
Have you ever wondered why some businesses thrive while others struggle to survive? The answer, often, lies in strategic pricing. Setting prices that ensure the profitability and sustainability of your business is a challenge, but it doesn’t have to be a tough battle. Imagine a craftsman who makes unique pottery. He knows the cost of materials, but can’t understand why some pieces sell well and others don’t. To solve this, he decides to map each stage of production, from choosing the clay to the final packaging. This detailed analysis led him to a crucial discovery: the time spent painting the pieces was the factor that most impacted the final cost. Understanding this dynamic, he reassessed his prices, charging prices that reflected the time and complexity of each piece. This story illustrates the power of activity mapping for strategic pricing. Through a detailed analysis of each step in your process, you gain a deep understanding of your business and can set prices that ensure profitability and sustainability. In this article, I will show you how to master the art of pricing, unraveling the detailed costs per activity and transforming your business into a profit machine. Get ready to discover the secret to strategic pricing and stop losing money!
Unraveling the Map of Profitability: A Dive into Activity Mapping
To achieve success in an increasingly competitive market, you need to go beyond intuition and “magic formulas.” You need a clear and accurate vision of every gear that drives your business. That’s where activity mapping comes in. Imagine a detailed map, where every step, every task, and every resource used in your company is meticulously identified and analyzed. This map, my friend, is activity mapping, and it’s the compass that will guide you on your journey to strategic pricing and maximum profitability.
Why Map Your Business Activities?
Think of a clock. For it to work perfectly, each gear, each piece needs to be in sync. Similarly, in the business world, every activity, from production to customer service, directly impacts your bottom line. By mapping your activities, you:
- Eliminate “guesswork”: Leave assumptions behind and have concrete data about how your business operates.
- Identify bottlenecks: Find out which activities are delaying your processes and impacting your productivity.
- Optimize resources: Allocate your resources intelligently, eliminating waste and maximizing efficiency.
- Strengthen communication: Share the map with your team, promoting collaboration and understanding of the process as a whole.
- Improve risk management: Anticipate potential problems and find effective solutions, ensuring the stability of your business.
In short, activity mapping puts you in control of your business, allowing you to make strategic decisions based on real data, not assumptions.
From Chaos to Clarity: Building Your Strategy Map
Building your business activity map may seem, at first glance, like a complex task. But believe me, with a clear and objective method, you can unravel the secrets of your operation and pave the way to success. To guide you on this journey, we will use as an example a company that offers online courses, showing how each stage of the process can be mapped and optimized.
Step 1: Define the Scope of Your Map:
Start by defining which process you want to map. In the case of the online course company, we could choose the process of creating a new course, from the initial idea to the launch.
Step 2: Detail the Stages of the Process:
Divide the process into clear and sequential stages. For our example, the steps could be:
- Idea Generation: Brainstorming of topics and validation of market demand.
- Content Planning: Definition of the program content, format of the classes and supporting materials.
- Course Production: Recording of classes, video editing, creation of presentations and supplementary materials.
- Platform Development: Configuration of the distance learning (EAD) platform and content upload.
- Marketing and Launch: Creation of marketing campaigns, dissemination on social networks and launch of the course.
- Student Support: Addressing student questions, progress tracking and feedback.
Step 3: Identify the Activities of Each Stage:
Within each stage, list all the activities necessary for its execution. For example, in the “Course Production” stage, the activities could be:
- Hire a videographer.
- Record classes in a studio.
- Edit videos.
- Create PowerPoint presentations.
- Develop exercises and support materials.
Step 4: Assign Responsibilities:
Define who is responsible for each activity, ensuring that everyone knows their role in the process. This increases accountability and prevents rework.
Step 5: Determine the Necessary Resources:
List the resources needed to perform each activity, such as:
- Human resources: videographer, designer, virtual assistant, etc.
- Material resources: computer, camera, editing software, etc.
- Financial resources: investment in platforms, software and services.
Step 6: Estimate the Time of Each Activity:
Define the average time required to complete each activity. This estimate will be crucial to setting realistic deadlines and avoiding delays.
Step 7: Document and Visualize Your Map:
There are several tools that can help you create a visually appealing and easy-to-understand map. Use flowchart software, spreadsheets, or even a whiteboard to record information. The important thing is that the map is clear and accessible to the entire team. Remember: activity mapping is an ongoing process. As your business evolves and transforms, review and update your map to reflect changes and constantly optimize your processes.
From Theory to Practice: Real Examples of Activity Mapping
To illustrate how activity mapping can be applied in different scenarios, let’s analyze practical examples of companies that used this tool to optimize their processes and increase their profitability:
Example 1: Gourmet Restaurant
A gourmet restaurant decided to map its activities to identify bottlenecks and optimize customer service time. By analyzing each stage, from reception to dish delivery, the restaurant discovered that the biggest delay occurred in the kitchen, during the preparation of the dishes. Based on this data, the restaurant reorganized the kitchen layout, invested in more efficient equipment and trained the chefs to optimize dish preparation time. As a result, the restaurant was able to reduce customer wait times, increase table turnover and, consequently, increase its profitability.
Example 2: Fashion E-commerce
A fashion e-commerce was facing problems with the logistics and delivery of its products. Through activity mapping, they identified that the bottleneck was in the order picking and packaging process. The company decided to invest in a more efficient inventory management system and automate part of the packaging process. With these changes, the e-commerce was able to reduce order delivery time, reduce logistics costs and increase customer satisfaction.
Example 3: Law Firm
A law firm decided to map its activities to identify opportunities to increase team productivity. By analyzing the process of drafting petitions, the firm realized that lawyers spent a lot of time on repetitive tasks, such as document formatting and case law research. To optimize the process, the firm invested in legal software that automated repetitive tasks and provided access to complete legal databases. With these tools, lawyers were able to dedicate more time to strategic activities, such as case analysis and client service, increasing service quality and customer satisfaction.
Strategic Pricing: Transforming Activities into Profit
With the activity map in hand, you have a complete X-ray of your business, but that’s just the beginning. The next step is to use this valuable information to set prices that reflect the value you deliver and ensure the financial health of your business. Here are the essential steps to use activity mapping as a basis for strategic pricing:
Step 1: Calculate the Real Cost of Each Activity:
After mapping your activities and resources, it’s time to calculate the cost of each stage of the process. Add up the direct costs, such as raw materials, inputs and labor, and the indirect costs, such as rent, electricity and internet.
Step 2: Define the Cost Price:
Add the costs of all activities to obtain the total cost of your product or service. This will be the basis for defining the minimum price you need to charge to cover your costs.
Step 3: Add Value to Your Product or Service:
Remember that the price you charge is not just for the cost of production, but for the value you deliver to your customer. To define the value you deliver, consider:
- Differentials: What makes your product or service unique and better than the competition?
- Benefits: What problems do you solve for your customer?
- Results: What tangible results can your customers expect to achieve by purchasing your product or service?
Step 4: Analyze the Competition:
It is essential to know the price practiced by the competition to strategically position yourself in the market.
- Premium Price: If your product or service offers more value than the competition, you can position yourself with a premium price.
- Competitive Price: If your product or service is similar to the competition, you can opt for a competitive price, seeking to attract customers through cost-effectiveness.
- Market Penetration Price: If you are entering a new market, you can use a lower price to gain customers quickly.
Step 5: Test and Adjust:
Defining the ideal price is a dynamic process. Don’t be afraid to test different price ranges and observe the market response. Analyze your results periodically, make the necessary adjustments and find the balance between the value you deliver and the price the market is willing to pay.
Conclusion: Building a Prosperous and Sustainable Future
Activity mapping is a powerful tool that allows you to unravel the secrets of your business, optimize your processes and set strategic pricing that ensures profitability and sustainability. By putting into practice the strategies we discussed in this article, you will be on the right track to transform your business into a success machine, capable of generating extraordinary results and building a prosperous and sustainable future. Now that you have the map of the mine in your hands, it’s time to act! Implement activity mapping in your business and reap the rewards of strategic and efficient management. Success awaits you!
Sources of Inspiration
- Osterwalder, Alexander; Pigneur, Yves. Business Model Generation. Alta Books Publishing House, 2011.
- Kotler, Philip; Keller, Kevin Lane. Marketing Management. Pearson Publishing House, 2012.
- Porter, Michael E. Competitive Strategy. Campus Publishing House, 1986.
- Hammer, Michael; Champy, James. Reengineering: Revolutionizing the Company for Cause, Customers and Results. Campus Publishing House, 1994.
Activity Mapping: Unravel the Map of Profitability 🗺️
Business Activity Mapping
