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The Crab-Like Dilemma in Pricing

When we see two species of animals that look alike, we often assume that they are biologically related. But scientists say that different species sometimes evolve to have similar characteristics without being related at all.

In fact, the creatures that most non-scientists (i.e., you and me) lump together as “crabs” are actually the result of at least five independent evolutionary processes. For some reason, nature seems to prefer crustaceans that evolve to have a crab-like body. Scientists actually have a name for this phenomenon—carcinization, defined as “the many attempts of Nature to evolve a crab.”

Something similar happens to pricing teams. No, we’re not saying that if you work in pricing long enough you’ll become crabby (though that might also be true). We’re saying that many pricing groups have independently evolved to have exactly the same characteristics.

And in this case, that’s not a good thing.

Pricing teams sit on top of a gold mine of data. They, of course use that information to improve pricing. But they could also use that wealth of data to uncover additional sales opportunities, streamline processes and decision-making, and ultimately, the bottom line. Becoming more strategic in this way seems like it would be the natural path.

But for some reason, many teams seem to prefer scuttling around attending to tactical tasks. In a weird sort of evolutionary convergence, many of them “stay in their lane”–focusing on reporting results, data entry, or just daily firefighting.

If you see this happening to your team, you don’t have to just accept your fate. If you want to avoid becoming crabs or want to evolve past your crab-like form, we have four recommendations:

  1. Clarify roles and expectations. Pricing is cross-functional in nature with many different groups and departments involved. Making sure everyone is headed in the right direction (and doing the right things) can be a significant challenge. If you need some help in this area, check out Cross-Functional Pricing.
  2. Develop a strategic roadmap. If you’re going to try to fight the natural evolution of things, it helps to have a plan on where you want to go. Having a roadmap gives you the opportunity to chart a course towards becoming more strategic while balancing the day-to-day tactical requirements you can’t avoid. Developing a Winning Roadmap for Pricing explains how to create and implement a plan that will work for your situation.
  3. Put the right tools in place. Modern technology can automate the routine tasks that drag you down. Careful investment in tools can give you the freedom to focus on more strategic pursuits while opening up new opportunities for strategic analysis and dial in prices that can greatly improve the bottom line. Making Sense of Pricing Technology offers guidance on how to select tools that will pay off in the long run.
  4. Foster a Culture of Strategic Thinking. While tools and planning can help, you ultimately need to have the right kind of culture to thrive as a strategic pricing team. If you don’t have that culture today, your team can advocate for the kinds of changes that can bring about the right atmosphere. The From Tactical to Strategic Pricing webinar shows how other teams have made this switch and offers some helpful advice.

Nature might love a crab, but becoming a crabby, tactical team doesn’t have to be your fate. Evolution also offers examples of decarcinization, most notably the coconut crab. (Be warned: coconut crabs are garbage can-sized nightmares that may have eaten Amelia Earhart and will live in your nightmares forever once you see one.)

Take charge of your team’s evolution by intentionally taking steps to become less crabby, more strategic, and ultimately more valuable.

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