As the field of strategic pricing continues to grow at an ever-increasing rate, more and more companies are wondering how to start their own strategic pricing programs. The challenge for most firms is that, unlike finance, marketing, operations or sales, strategic pricing doesn’t have a home within most organizations – at least not yet. When you add the fact that strategic pricing is really quite a narrow field of expertise, has its own vernacular, and requires input from many departments, it’s no wonder so many companies struggle to get started. Often, price consultants can help make the transformation.
If you have been reading our newsletters over the past few years, you have seen that strategic price management can make a tremendously positive financial impact. By now, you must be thinking about how it could improve your bottom line.
Get ready to launch! Following is a summary of four key drivers of strategic pricing success you can leverage to introduce pricing discipline in your organization:
If our 16 years of experience has taught us anything, it’s the importance of having support from senior-level management. Advancing your pricing capabilities will mean a culture change within your organization in how it views and manages prices. These types of changes flourish when management makes them a priority. It shouldn’t be difficult to get them on board: Senior managers are keen on the margin, value and cash flow gains that strategic pricing delivers.
When strategic pricing is new to your organization, it is vital for you to get everybody on the same page. Schedule a strategic pricing training session to kick off your program. A one-day program will get everybody talking the same language, provide insight into your pricing challenges and opportunities, and provide a vision for going forward. You might consider starting with the sales team, where price decisions and negotiations occur every day. Getting the sales team on board early removes potential barriers and spurs short-term gains.
Perform some initial pricing data analysis to identify the low-hanging fruit for price and margin improvement. Some simple analysis will provide great insight into your pricing practices and typically reveals opportunities.
Training programs, especially those that include data analysis on your business, provide “next day” pricing opportunities. These are short-term, easy-to-capture gains in price and profit margins. Early wins are important to stimulating momentum in your pricing program.
Achieving pricing excellence in an organization can take years, but the first steps are relatively easy and almost always fruitful. It’s not unusual for a company to gain one or two margin points from a single well-executed training session. What are you waiting for?
Speak with PricePoint Partners price consultants to start your pricing strategy program.