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Proving Pricing’s Value…Again and Again

In a PricingBrew Journal subscriber-only training seminar, Proving the Value of Pricing, a subscriber asked a very telling question:

Do we really have to keep proving the value of pricing?

Of course, there’s probably a silent “over and over…and over again” at the end of the question. It seems that a lot of pricing groups find themselves stuck in the proving ground stage, where they feel like they have to continually prove the value of active price management and justify their existence.

But is this really the case? Is there really a quarterly question as to whether or not there’s value in active price management? Very often, the answer is “no”—but the pricing team just doesn’t realize it.

In many cases, a pricing function is something relatively new to the company. And truth be told, the rest of the organization may not know how such a function should be measured over time. So, when the pricing group makes its justification argument—quarter after quarter, like clockwork—it’s easy to conclude that’s how it’s supposed to be.

Sure, every other department and function in the company may be being treated differently, but who’s going to argue? It’s always nice to see what you’re getting, right? And if the pricing team insists on justifying their existence and proving their value each and every quarter, then that must be what everyone else is doing, too.

It becomes a self-feeding cycle—the pricing team assumes everyone else still needs proof, and as a result, everyone else begins to expect the pricing team to keep providing that proof.

In sales, there’s an old saying about knowing when it’s time to stop selling and just take the order already. It’s the same with a pricing function. To break the cycle, you have to decide for yourself that the proving ground stage is over and that the value of active price management has been sufficiently demonstrated to warrant ongoing commitment.

Then you have to figure out what’s next and just get on with it already.

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