Pricing and Profitability Management: A Practical Guide for Business Leaders

Beginning the Journey: Key Questions to Ask

Given that pricing improvement initiatives can be so complex, emotional, interdependent, and impactful, organizations must prepare for an intense and a sometimes lengthy (often multiple year) effort. Here are some key questions management must ask itself:

• Where do we begin?
• How do we build our capabilities; understand our products, markets, and buyers; create effective value propositions; develop and maintain effective segmentation models; and determine the right prices?
• How do we get the sales force (or whoever has the fundamental buyer–seller interaction) to manage its relationships so that it can execute prices in a way that meets or exceeds the required margin performance while at the same time satisfying the client?
• Just as important, how do we obtain and retain the attention of the organization? How do we quickly drive tangible value at a level that will demand continued executive attention and support?

There is no ideal time to address pricing improvement. The additional margin it can secure and the minimal time it can take to achieve means pricing improvement initiatives should be launched regardless of most external conditions. In a chaotic or recessionary economic environment, many companies mistakenly feel they cannot work on price performance. Money is tight, customers are extremely price sensitive, and the company may seem too stressed to take on a major cross-functional initiative. In reality, a market upheaval presents ...