The current situation
What do you focus on with your pricing?
THE CURRENT PRICING PARADIGM
Your competitors determine your price
The price setter
With this strategy, the operator of the petrol station sets the price in the market. This is generally done by oil companies that also operate petrol stations. Price setters put a lot of time and energy into determining the optimal price, but this makes them less agile.
The majority of petrol station operators in the Netherlands are price followers. The operator sets their price by reacting to the prices of their competitors. Price followers rely a lot on their experience and their vision when setting their prices.
With this strategy, the operator of the petrol station always wants to offer a lower price compared to their competitors. These are generally the unmanned petrol stations. Discounters can easily automate, but they quickly give too much discount, which reduces margin.
A NEW PRICING PARADIGM
Determine your price by looking at your customers
The current pricing strategies each have their own pros and cons, but all three are data informed strategies above all else. Petrol station operators often look at the prices of their competitors and analyze this data. The operator then makes an informed decision regarding their fuel prices based on the prices of their competitors, their own vision and their pricing strategy. However, current strategies seem to forget one of the most important factors when determining their price, namely: the customer.
It is crucial to look at your customers when you want to optimize your price. Why are your customers coming to your petrol station? The answer on this question makes it possible to determine an optimal price for the fuels at your station. Do they come to your station because you offer low prices or are there other reasons why they fill up at your station? What impact will a cent more or less discount have on your volume and what does this mean for your margin? By looking at your customer, your pricing strategy is not only informed by the data you are gathering at your station, it will be driven by it.