“A fresh start is always made with dirty laundry.” (Teri Louise Kelly)
What does a lean, mean pricing machine look like? We identify several key considerations and then explore three common doubts. First, the question of structure. Specifically, management needs to decide how far down the company to push responsibility, and how many different job profiles to involve in the process. Clearly, there is no “one-size-fits-all” solution. Second, incentives. What is the best way to compensate those who are responsible for the “health” of the prices we actually achieve in the market? In the session, I present several possible schemes and discuss their strengths and weaknesses. Third, remember that pricing decisions exist at different levels of abstraction. At the highest point, the goal is to gauge the tone of a particular market: significant fluctuations in demand or supply, new regulation, changes in customer sentiment, and so on. At the second level, monetization focuses on the task of capturing value from customers, keeping in mind that differences in valuation are expected and should be exploited. Finally, at the third and most granular level management needs to ensure that the pricing protocol does not result in costly leaks: there needs to be a logical argument for each and every deviation from list prices.