Mastering Pricing is vital to the success of a company, as pricing is the most powerful profit lever. If you’re in charge of pricing in your company, you may have what it takes to set prices efficiently, but are you smarter than your competitors?
Do you have better pricing capabilities than your competitors?
If your answer is yes, your company probably has internal processes to keep up with the market’s constant evolution and align with your industry’s best pricing practices.
If your answer is no, you should consider starting a Pricing Project. It will lead to improved methodologies and processes, trained and knowledgeable human resources, and the right tools to optimize pricing decisions. Doing nothing means leaving money on the table and letting your competition eventually get the upper hand.
How to make quick progress?
The bigger the gap between your current capabilities and your objectives, the greater the impact of a Pricing Project will be.
If your company is new on the market, identify and start applying your industry’s best practices. Put in place the human resources, methodologies and technology in order to structure, optimize and monitor your pricing decisions like most successful companies.
Well-established companies, on the other hand, should aim at a progressive approach regarding pricing practice. Indeed, even if there is always room for improvement, you cannot dismiss your existing organizational structure or throw away overnight the pricing processes in place.
However, the progression is not linear, be it in terms of investment, of ROI or in what regards organizational transformation. In other words, you can sometimes increase your margin with a small investment. But taking a real step to higher grounds requires a proper Pricing Project, tailored to your organization and needs.
Where do we start?
The nature and structure of your Pricing Project depends on your current situation. Therefore, you should start by evaluating your company’s pricing maturity level. Knowing this will help you identify and prioritize the pricing capabilities you need to improve, and ultimately make the right investment that will take you to the next maturity stage you want to reach.
There are different methodologies to evaluate a company’s pricing maturity level. You may apply any of them internally, but experience shows that the results of an internal assessment may be biased.
As pricing experts, we evaluate our customers’ capabilities from an external standing point taking into account the latest market trends and best practices. We provide them with an objective evaluation and action plan through our Pricing Power Assessment service.
In the coming posts, we will be examining the different capabilities that are central to pricing, such as human resources, methodologies or tools, so you can progressively carry out your Pricing Project and make better pricing decisions.
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