Pricing and Profitability Management: A Practical Guide for Business Leaders

Tips for Moving Forward

To make important process improvements, some redesign will likely be necessary. Typically, this begins with the documentation of existing processes so that gaps and inefficiencies can be identified objectively. Once these have been noted, firms can consider the Best Practice Framework (Level 1) processes discussed in this chapter as they begin their redesign.

Key Questions to Address Upfront

• What formal and informal pricing processes currently exist?
• What written procedures and guidelines are in place?
• What consequences will occur if guidelines are not followed?
• What are effective industry practices?
• How can existing processes be streamlined or improved?
• How much flexibility and enforcement should be built into the new process?
• How often should performance be measured?

Simple Process Options Achievable with a Redesign

• Redefine where and how an activity is performed
• Add or remove an activity, or move it to another process or subprocess
• Combine two or more activities into one
• Break an activity into two or more activities
• Change the sequence or timing of activities
• Make sequential activities simultaneous
• Automate an activity
• Employ a new tool
• Change responsibilities and roles
• Change an activity name or description
• Change linkages to other processes or subprocesses.

Principles to Keep in Mind

• Focus on the customer. Value can be created only by addressing the needs and goals of the customer. Pricing processes should be designed to reflect the customer's ...