Pricing with Confidence, 2nd Edition

CHAPTER 5Rule Five

Strategy Sets the Direction

The right price strategy uses price effectively in all conditions to preserve both revenue and profitability. The right strategy ensures you have accounted for your value, competition, market growth and customer adoption, and objections. Finally, it makes sure you execute by engaging a committed and knowledgeable salesforce.

Setting an organization's price strategy, difficult in the best of times, is complicated by the distortions of actual inflation and, more, the expectations of inflation. Chapter 5 demonstrates the fundamental importance of getting the price strategy on sound footing to defend the tactical and operational pricing decisions up and down the organization. It requires nothing less than the concerted efforts of everyone in the organization to marshal all the levers of pricing to ensure that resources are deployed in the most efficient and effective manner possible.

Price Strategy and Inflation

The right price strategy adapts to a high inflation environment. Nobel Prize–winning economist Joseph Stiglitz sees prices increases as a “healthy balancing of supply and demand.” We believe that increases in demand are desirable for a business but failure to adjust pricing effectively to take advantage of those increases can leave a lot of money on the table.

Pricing can't “solve” the economic problems that we are all now facing. What a price strategy can do is mitigate some of the damage in terms of lost profits and revenue ...