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2 Things Execs Don’t Get about Pricing

Few things in life are more irritating than sharing a whole lot of information with someone only to have them respond by saying “Duh!”

Whether you are the parent of a third grader, a high school teacher, a scientist presenting a paper or a businessperson in a meeting, no one wants to get the “duh” response. We all like to think that we are interesting and original. So having someone imply that everything we have just said is obvious is annoying at best — and soul-crushing at worst.

As a result, society conditions us from an early age to avoid sharing information that other people already know. This becomes a particular problem for pricing professionals because we assume that other people know what we know.

But the truth is, most businesspeople don’t know what you know about pricing.

Even if he or she has an MBA, your average executive probably hasn’t studied pricing in depth and almost certainly doesn’t have any direct experience with the discipline. As a result, most of them don’t understand two very central principles:

1. Pricing is really important to the business.

We know, we know, inside your head, you just said, “Duh!”

Don’t worry, our souls aren’t crushed.

You understand the importance of pricing — otherwise you probably wouldn’t have taken a job in this field. But believe it or not, a lot of people just don’t get it. When you go looking for an executive sponsor, you need to start at this very basic level. Even though it seems ridiculously obvious to you, it’s a good idea to walk through the math that demonstrates how a very small pricing change can have a huge impact on profitability.

2. Current pricing isn’t as good as it really should be.

Did you just think “Duh!” again?

You know that your pricing stinks, or else you wouldn’t be looking for an executive sponsor for your pricing project in the first place. But the exec might think things are going fine. If the last quarterly report looked good, your executives probably don’t think you have any big problems. And if you tell them your pricing could be better, they’ll file it away as an interesting nugget that they might think about later, but they won’t do anything about it today.

If you want to get an executive sponsor to champion your cause, you have to awaken them to the notion that your current pricing is a problem. You are not doing as well as your competitors, and you are at serious risk unless something is done. Only when they understand the magnitude of the problem will they be willing to get on board with your proposed solutions.

So how do you get your management to understand those two points?

We have a whole webinar on Proving the Value of Pricing. It can help you learn to speak the same language as your executives and convince about pricing’s worth. That’s important, because getting an executive sponsor is an extremely important first step in any major pricing initiative.

Duh.

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