What do financial market trends, YouTube cooking tutorials, and your business mentor all have in common?
They are all going to tell you to “trust the process.”
Here at PricingBrew, however, you’ll hear us talking less about trusting the process and more about refining the pricing process.
Every pricing strategy is made up of a series of steps and sub-steps. Each of those steps and sub-steps is a potential opportunity for improvement. And we strongly encourage you to tweak them to maximize your organization’s profitability.
But sometimes those tweaks go awry. In fact, we’ve had the opportunity to see quite a few companies whose pricing strategy improvement efforts went catastrophically wrong. Often, those teams made one of the five biggest pricing strategy mistakes:
- Making a business case for tactical automation based on a strategic improvement. Just like buying Excel doesn’t make you a data scientist, buying an automation tool isn’t going to make you a pricing strategist. Automation is a tactical tool, not a replacement for strategy. And promising management that a new tool will lead to strategic gains is a recipe for disaster.
- Expecting automation to take the place of process development. Automation isn’t going to create a pricing strategy for you. You need to have a strategy before you can automate it. You can’t circumvent the need for strategic development.
- Addressing symptoms instead of true root-causes. It’s all too common for a company’s pricing strategies to become a jumbled mess over time. Why? Because they create new strategies instead of dealing with underlying problems. For example, if your pricing isn’t competitive, don’t just create a new strategy for pricing adjustment. Instead, you need to figure out why your pricing is off and work on that.
- Adding more resources to address a poorly designed pricing strategy. Adding more team members to a flawed strategy isn’t going to make the strategy any better. In fact, it’s just the opposite. More team members are just going to make things even more complex. Again, make sure you are addressing the root cause of your problem, which in this case is a poor strategy.
- Focusing too much on personal pain points with little business value. Just because a particular step in the pricing process annoys you doesn’t mean that’s where you should focus your efforts. Maybe you dislike a particular aspect of the market research or maybe the team finds the data analysis tedious. Updating those things isn’t necessarily the best use of your time. Instead, take a step back and see if your annoyance is related to a larger issue. Often, addressing the larger issue yields excellent business results while also improving the things you find irritating.
If reading about the wrong way to do pricing strategy improvement has whetted your appetite for learning more about the right way, check out the full webinar on Pricing Process Improvement. You’ll find additional tips in Optimizing Pricing Operations.
Your pricing team members are likely going to be trusting the pricing strategy that you give them. You owe it to them to make sure that strategy is as effective as it can be.
Pricing Process Improvement
In this session, we discuss the critical differences between process types, how to use end-to-end process mapping for diagnostics and prioritization, pricing technology considerations, and common mistakes to avoid.