Pricing and Profitability Management: A Practical Guide for Business Leaders

Identifying and Empowering Pricing Leaders

Pricing organizations tend to be spread across many functions and departments, so effective management can be challenging. Yet companies must overcome this fragmented structure to pull together a cohesive organization. To accomplish this, companies should firms should:

• Identify pricing leaders. These managers will make the key decisions and set policies. They can be selected (1) from those people already in positions of authority (even if not in a dedicated pricing department) or (2) from early adopters of new processes and technologies who demonstrate a willingness to take risks or to accept challenges.
• Align the leaders. Senior pricing professionals in the organization may well disagree on key issues initially. Organizations must find ways to get them to agree on a vision and direction. For example, the leaders may need to focus on pocket margin as the basis for measuring profitability or plan a transition from cost-plus to value-based pricing. Without buy-in from the designated leaders, organizations will have trouble getting the other pricing professionals to go along with the changes.
• Ensure the leaders provide tangible support. To create a united pricing organization, leaders must dedicate the time, equipment, and technology resources necessary to effect massive changes—both financial and cultural. For example, if the pricing organization has an IT leader—and it should—then he or she should make the implementation of new pricing ...