Pricing and Profitability Management: A Practical Guide for Business Leaders

What Is Price Execution?

The policies and processes that govern profitable decision making on a daily operational level are combined in price execution. In business-to-consumer pricing, execution more narrowly refers to the process of getting product prices to the shelves in the stores. In this chapter, however, we will address the broader definition.

Effective execution brings discipline to pricing and profitability management. It requires hundreds—or thousands—of small actions, dispersed across various functions and levels, to be done correctly. Proper execution can help ensure these actions consistently work in concert by using well-defined processes and clear policies to help define how prices are communicated, executed, measured, analyzed, and adjusted by every element of the organization involved in pricing management.

Execution extends from price setting and customer negotiation to performance monitoring and compliance. It should be considered foundational because all other pricing management competencies are built upon it. As ManuCorp's CEO discovered, a company can have world-class capabilities in all other major areas, but if it falters in execution, the other capabilities may not matter. The latest software and most advanced mathematical tools may be used to calculate optimal prices, but if these prices do not reach the market quickly or accurately, then the projected benefits will not be realized and the company could lose money on every transaction.

Establishing Price ...