Pricing with Confidence, 2nd Edition

CHAPTER 6Rule Six

Innovate for Growth

Innovation is the lifeblood of successful organizations. New innovation meets the evolving needs of customers and focuses the organization to stay ahead of competitors. It provides a platform for Give-Gets to power win-win negotiations. When products are regarded as commodities, new services can serve to differentiate products and prop up prices.

Pricing is critical to businesses, but it's not the most vital thing. Businesses need to grow. Like sharks, which must keep moving to stay alive, businesses need forward momentum in the form of innovative products and services, expanding markets, and new opportunities for revenue and profit. Without such momentum, businesses cannot flourish. A disciplined pricing strategy is an important means to that end. But leaders must not be distracted from the main goal: deploying innovation to boost revenues and profits. Strategic pricing will help capture the value that your business creates, but without something to capture, even the most brilliant pricing strategy can't help you.

Without new products and services in the pipeline, businesses are reduced to having one lever to drive growth—price. These businesses push for higher prices in the hope that their customers will accept the price increases. The fear, of course, is that customers will bolt in the face of direct price increases. Some businesses try to finesse the issue by implementing back-door price increases in the form of layered fees and service ...