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The Biggest Challenge in Pricing?

President Lyndon Johnson once said, “There are no problems we cannot solve together, and very few that we can solve by ourselves.”

Most pricing practitioners are quick to recognize the truth of the second half of that statement. After all, almost everything we do in pricing requires the help of another department.

You need to work with sales to make sure that they are following your pricing guidelines and negotiating effectively with customers.

You need to work with marketing to make sure that they are putting out the most effective messages about what differentiates your product from the other options.

You need to work with product managers to make sure that they are developing or sourcing products that your customers want and that will yield high margins.

And you need to work with finance to make sure that they are using the right cost basis for your products and to get support for your pricing structure.

Given this reality, it’s no surprise that when we ask pricing professionals about their biggest challenge, we almost always get the same answer: dealing with other departments.

We would all like to think that if we just focus on doing a good job with pricing, our companies will prosper and we will advance our careers. But the truth is that in order to be good at pricing, you have to be good at more than just pricing. You have to be good at influencing other departments. Before you can accomplish anything, you’ll probably need the help of at least one other department. And that means you need some people skills.

Unfortunately, many of us chose pricing as a career path because we really like working with data. People skills are not our forte.

Fortunately, people skills can be learned.

At this point, you’re probably starting to worry that we’re about to recommend one of those touchy-feely seminars where you practice trust falls and then sit around in your bare feet and sing “Kumbayah.”

But you shouldn’t worry—we hate those kind of seminars too.

Instead, we recommend that you start improving your people skills with a much more sensible activity: learning more about the other departments in your company. In particular, you should learn about what goes on in sales, marketing, product management, and finance because those are the departments that will have the biggest say in the success or failure of your pricing initiatives. Find out how they think. What makes them tick? What is important to them?

When you know the answers to those questions, you’ll be in a much better position to convince them to support your plans.

To get you started, we have a webinar called Breaking Out of the Pricing Box. It explores each of those four key groups and analyzes the problems that pricing people often encounter when dealing with them. More importantly, it offers tips for communicating with them more effectively and turning them into allies and friends.

When you truly understand the other people you work with, you’ll be in a better position to understand the truth in the first half of Johnson’s statement—”There are no problems we cannot solve together.”

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