Pricing with Confidence, 2nd Edition

CHAPTER 10Rule Ten

Deploy Three Practices to Increase Profits

Price theory and complex models are great but success in pricing often comes from a few practices we've learned over the years to dramatically improve profits. These practices, straightforward and easy to communicate, make these practices easy to implement even in complex organizations challenged by the highest sustained inflation rates in four decades.

What is the foremost goal of a successful business? To serve customers at a profit. Without the profit part, you don't have a business but a hobby. Now, the profit part may seem obvious, but you'd be surprised how often in the midst of intense price competition, the profit imperative is missing in action. We've seen profitability take a rear seat in so many negotiations across all industries and verticals. No business is immune. Repeatedly, we've seen our clients become so mired in details and day-to-day fire drills that they lose focus on the profit prize.

Our ultimate advice is to focus on profit first. Do that well, and you'll spend less time worrying about revenue and volume.

This truth is doubly true when considering price strategy in inflationary times. But know this: there is no magic silver bullet to “fix” inflation with pricing. The goal is to maintain profitability and work to grow in an inflationary market. We must carefully manage the levers in our control and pull them at the right time, for the right reasons, and at the right places (i.e., strategic ...