Pricing Done Right

CHAPTER 7 Pricing Continuous Improvement and Analytics

A wide variety of forms of analysis inform the gamut of pricing decisions. Some forms of analysis will be done infrequently, in response to a unique challenge or opportunity. Other forms of analysis will be done on a more regular basis. While the methods for conducting pricing analytics can be found in pricing textbooks such as Pricing Strategy (Smith 2012), a framework for managing pricing decisions needs to clarify when and where these analytics should be routinely applied.

There are three areas of pricing analysis that are ripe for turning into routines: (1) pricing across the offering innovation cycle, (2) price variance policy improvement process, and (3) in-market price improvement process. These three pricing routines are used to guide an offering from conception throughout its life cycle. They provide a decision feedback loop to enable pricing to be improved over time. These are areas where the organization’s skills can be improved through repetition and continuous improvement. And, these are areas that most leading firms address once a year or more frequently.

It must be accepted that prices will often need adjustment once the offer hits the market, and that price variance policy, too, gets adjusted between the initial launch period and the time the offering hits maturity. Pricing analytics is used to measure the relationship between market pricing and market acceptance, between price variance policy and policy ...