PricingBrew

Insights & Tips

Already a subscriber? Login

Become a subscriber and unlock an information arsenal focused on making your pricing efforts more effective.

Isolating the Impacts of Pricing Improvements

Very early in my career, I had some experiences that a number of readers will no doubt be able to identify with…

Over time, my team would do a great job identifying and executing some really meaningful pricing improvements. Of course, we fully expected all that hard work and effort to boost to our division’s bottom-line profits.

But then, one of two things would inevitably happen:

  1. All of the profitability gains we produced were ultimately offset by other things—cost increases, mix changes, seasonal volume dips, and so on.
  2. All of the profitability gains we produced were ultimately attributed to other things—cost reductions, mix shifts, seasonal volume spikes, etc.

It seemed like we just couldn’t win.

When profits were relatively flat, we knew darned well that our pricing improvements were bolstering profitability in the face of cost increases and volume dips. And we knew that without our improvements, profits would have gone down, rather than simply staying flat.

On the other hand, when profits were way up, we knew that our pricing improvements were responsible for a large portion of those gains. And we knew that what everyone else was saying about cost reductions and seasonal upticks was largely Bravo Sierra.

We knew it…but we had a helluva time proving it!

That’s why I was really pleased to see the addition of the Impact Isolation Tool to the PricingBrew Journal portal. Available to subscribers for download, this simple spreadsheet-based tool allows you to:

  • Isolate the impacts that volume, pricing, costs, and mix have had on period-over-period performance changes.
  • Quantify how much volume, pricing, costs, and mix have contributed to differences in both revenues and margin dollars.
  • Identify where changes in product costs have magnified…or mitigated…improvements in realized prices and volume.
  • Put an end to the second guessing, skepticism, and in-fighting over who or what should really be getting the credit (or blame).

Thinking back to those early days, I kick myself…hard and repeatedly…for not using a tool like this to measure, quantify, and communicate pricing impacts irrespective of whatever else might be going on with costs, volume, and mix. I guess the cycle of quarterly frustration was clouding my thinking, because something like this just never crossed my mind at the time.

That said, if someone had handed me a tool like this way back then, I’d like to think that even the much younger and less experienced “me” would be able to recognize a good thing when I saw it 🙂

ImpactEstimatorScreen2

Impact Isolation Tool

Using this straightforward tool, you can finally put an end to the second guessing and skepticism by isolating and quantifying the contributions of price, volume, cost and mix to period-over-period revenue and margin differences.

View this Tool

Get Immediate Access To Everything In The PricingBrew Journal

Related Resources

  • Diagnosing Pricing Problems

    Diagnosing Pricing Problems Webinar Splash

    When companies stop at a default diagnosis of, “Something’s wrong with the pricing,” they never identify and fix the true root-causes of the issues. In this on-demand webinar, learn how to identify the real root-causes behind pricing performance issues.

    View This Webinar
  • Navigating the Pricing Technology Landscape

    Navigating the Pricing Technology Landscape NarSplash

    Given the pace of change, it’s increasingly difficult to keep track of the various pricing technologies and what they’re best used for. In this recorded training seminar, we discuss the latest trends and developments and how different types of solutions compare.

    View This Webinar
  • Exploring Four Different Types of Buyers

    Nelson Hyde Interview Splash4

    To win a negotiation without giving up too much, it's important to understand who's on the other side of the table. This interview with Nelson Hyde teaches you about four types of buyers --- how to identify them and how to deal with them.

    View This Interview
  • Avoiding 3 Costly Price Segmentation Mistakes

    dia_avoiding three costly price segmentation mistakes

    Price segmentation is the cornerstone of any successful pricing program but it's easy to make costly mistakes that can jeopardize your efforts. In this guide, learn how to sidestep three common mistakes.

    View This Diagnostic