“A fresh start is always made with dirty laundry.” (Teri Louise Kelly)
What does a well-oiled pricing organisation look like? We explore three questions. First, and perhaps most important, there is the issue of structure. In particular, 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. The second question is one of 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 three levels of abstraction. At the highest point, that of the industry, the goal is to gauge the tone of a particular market: significant fluctuations in demand or supply, new regulation, changes in customer sentiment or economic wellbeing, changes in the competitive landscape and so on. At the product level, monetisation is focused on the goal of capturing value from customers, keeping in mind that differences in valuation are expected and should be exploited. Finally, at the transaction level the management team 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.