Set Better Prices

Pricing Affects Many Levels of a Company

Pricing is often thought of as the domain of the few people in a company who set prices. But in reality, pricing affects many levels of a company: CEOs searching for fast profits, CFOs focusing on revenue (instead of cutting costs) to improve financial health, marketing managers setting prices, product managers counting on price to meet their P&L responsibilities, and sales managers seeking new ideas to help with their daily pricing negotiations. Clearly pricing is an important strategy for many levels of a company.

What's interesting about pricing is that when you poll various people in a company about their pricing goals and strategies, you often end up with very divergent views. It is common to encounter various managers who want to "keep my margins above a target percentage," "mark up my costs by a fixed amount," or "be the king of market share." Every company has a few who "want to give my customers as many discounts as possible." Philosophies to implement pricing are equally divergent ranging from marking up costs to automatically matching competitors' prices to using "that's the way that we have always done it" methods.

No team can achieve the best results if its members can not agree on the goals and actions necessary to reach them. A crucial conversation about pricing needs to take place within every organization. It creates a common ground for better pricing. Most employees take pride in the products and services they provide and want their company to financially succeed. But to do better, they need pricing guidance.