Pricing Done Right

Preface

Company J versus Company K

Francis, Molly, Sally, and Charles, the good executives at Company J, have a plan and process for managing prices. Unfortunately, they know that it doesn’t work as planned. Even though each of these hard-working and thoughtful senior executives has something meaningful and important to contribute to pricing, the outcome never meets expectations. Something has to change, but what?

Francis is the Finance leader at Company J. As a normal part of his financial duties, he pays close attention to meeting shareholder expectations for profits. Profit expectations are translated into target margin expectations for all of the products of Company J.

Although Francis of Finance clearly communicates these target margins, it seems as if they are met haphazardly, if at all. Some products greatly underperform. A few products meet or exceed expectations, but they are a minority of Company J’s products.

Francis of Finance has considered divestiture of the underperforming product and business lines, but they represent a significant portion of Company J’s revenue, and other senior executives at Company J disagree with this approach.

Molly is the Marketing leader at Company J. As a natural part of her marketing duties, she monitors market share for each product. She is well aware that market demands, competitive actions, and pricing greatly impact market share shifts.

Though Molly of Marketing is aware of the target margins and sets prices and manages products ...