Connect the dots
To win in pricing, broaden your view
Setting price is clearly an important step to get value–but it’s not the only one. Learn how business leaders can avoid pricing mistakes.
Most companies think of price as a noun, not as a process. All employees can tell you (or find out) the current price for a given product, most can tell you the last time the price was changed, and some can articulate the reason for differences in the prices between products. However, very few employees can describe t he process by which prices are developed, the governance involved in making pricing decisions, and how pricing strategy supports their company’s overall objectives.
One theme that unites our varied work with clients across industries is that long-term results can be improved when the price isn’t just “right,” but when pricing is managed as a well-defined discipline and a sustainable capability.
In this article, we’ll look at how business leaders can:
- Avoid the mistake of taking an overly surgical approach to pricing
- Acknowledge and understand pricing interdependencies,
- Generate more value from their efforts in the area of pricing
Specifically, we’ll examine four components of pricing–elements that can make the difference when they’re addressed collectively.
First things first
Setting price is clearly an important step to get value–but it’s not the only one.
When companies implement an integrated process that adapts dynamically as prices are set, distributed, negotiated, and measured, they can achieve incremental benefits. Yes, it may require changes to the current way of doing business, from rewiring sales commissions and updating service procedures to potentially redesigning processes and partner management programs. But the effort is generally worth it.
Focusing on execution–essentially the entire chain of events that is set in motion from the moment the organization determines the desired list price, all the way through to invoicing–can help facilitate measureable, sustainable results.
Pulling it all together
A model that generates the most effective price is just that–a model. It doesn’t always take into account the nuanced ways that prices are distributed, negotiated, and measured.
From our study of the recently conducted pricing engagements, one thing has become clear: focusing only on one area in pricing will not give you the full benefits.
Consider the specific elements we’ve outlined in this article and have a plan for connecting the dots. Read the full article to learn more.