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This Is What Makes Others Envious About Pricing

If you talk to anyone who has managed a large construction project, they’ll probably agree that “The longer it takes, the more opportunities there are for problems.” And since most construction projects seem to drag on longer than expected, the problems often continue to compound.

You can see that principal at work in other disciplines as well. Whether it’s an IT team swapping out an ERP system or a marketing team rebranding a product, long-term projects are very likely to run into complications and delays, which in turn, lead to more complications and delays.

But pricing is different.

As pricing practitioners, we have the opportunity to make a huge impact on the company’s bottom line with relatively small, short-term projects. Where other teams might need to spend years making a wholesale change, we can have an equivalent effect just by making a couple of tweaks. In fact, those small tweaks are much more likely to be successful than large changes. Here are three examples where a little effort can yield outsized results:

  1. Make small price improvements sooner: Companies (and sales teams) sometimes hesitate to increase prices. And it’s understandable. No one wants to drive a customer away over a 1% price increase.But as a pricing professional, you understand that a 1% price increase might drive as much as an 8% to 10% increase in profits. And the sooner you make that small change, the better.Unfortunately, we’ve seen a lot of organizations get caught up in lengthy arguments about whether they should increase prices by 3% or 4%. Instead of waiting to get everyone to agree, you would be better off making a 1% or 2% change right away and then coming back for more later. We offer a host of tips for winning (or avoiding) internal battles like these in the Corporate Survival Strategies for Raising Prices webinar.
  2. Keep Pricing Initiatives as Simple as Possible: In the same way that small percentage increases can have a big boost to the bottom line, small improvements to pricing processes can have an outsized improvement as well.If you analyze your pricing processes, you’ll very likely find some opportunities for improvement that don’t require a radical change to how you do things. Simply paying attention to small problems that crop up and taking the time to identify the root cause can be a game changer.To learn more, check out Pricing Process Improvement.
  3. Avoid Big Changes Whenever Possible. Nobody likes change. That includes the sales team.If you ask them to do something completely different than what they are used to, you probably won’t achieve the results you want. But if you work within the systems and tools that they are already familiar with, you’re much more likely to see a positive effect.
    For more tips on working with—not against—your sales team, see Getting Salespeople to Price Better.

It’s easy to fall into the trap of thinking that you have to make a huge change to have a huge impact. After all, that’s true for most other business roles.

But by working smarter, not harder, you can avoid the problems that come with long projects. Instead, you can drive huge business improvements with minimal disruption.

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