There’s an interesting conundrum around pricing improvement…
On the one hand, we’ve all heard the old saw about how a 1% improvement in price can improve profits by many times that amount, right? And, most companies will indeed acknowledge the leverage afforded by pricing as being a mathematical certainty.
But on the other hand, to realize the massive benefits that most everyone will acknowledge, companies actually have to raise their prices…at least somewhere, and to someone. And that’s when all logic goes out the window and emotion takes over.
That’s when fear takes over.
In our Corporate Survival Strategies for Raising Prices training session, we discussed how many of the tactics and processes that are typically employed around price increases are really just treating the symptoms of organizational fear of the unknown. Specifically, many exec teams, pricing groups, and sales organizations struggle with raising prices because:
- They don’t understand the value their offerings are delivering.
- They aren’t sure how competitors will respond to their moves.
- They have no idea how their prospects and customers will react.
And not knowing these things, raising prices becomes a huge, unpredictable risk that can only be managed with lots of hand-wringing, cajoling, rationalizations, fallback plans, and compliance monitoring.
For some companies, however, raising prices isn’t nearly so onerous.
As highlighted in the session, these companies have done the work in the areas of value estimation, competitive analysis, price segmentation, and elasticity measurement. And in doing so, they’ve addressed and minimized the root-causes behind the organization fear that makes price increases such a scary proposition for others.
Simply put, if you want to minimize the tactical pain associated with raising prices, you have to do the strategic homework and get ahead of it.
To learn more about what some companies are doing to enable more painless price increases, check out the recorded replay of Corporate Survival Strategies for Raising Prices.