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Two Common Perspectives on Pricing (One is Wrong)

People are obsessed with finding the “right” way to do everything. If you don’t believe me, type “The right way to” into a Google search box. When I did it, the top words to complete that sentence were poop, sleep, do squats, pray, peel a banana, run, shave, do a push up, breathe, and fast. Now, I don’t know about you, but I’m pretty sure I know the right way to do all those things without Googling them.

And can there really be a wrong way to poop, sleep, and breathe?

Unfortunately, in pricing, a lot of people believe they are going about their jobs in the right way, but they aren’t. You might not realize it, but there really is a “right” and a “wrong” perspective.

The vast majority of pricing practitioners focus on the day-to-day. The immediate. The things they have to get done right now. These folks are always busy. They’re trying to get a quote back for a deal today. They’re crossing off items on their checklist for the week. They’re focusing on the margins for this quarter.

Those all seem like really good things to do. In fact, if you’re doing all those things, no one is going to tell you that you’re doing a bad job.

But the truth is that you’re thinking the wrong way.

While short-term thinking keeps you busy, it doesn’t make you very effective. When all is said and done, everything will be checked off your list, but you might not have actually accomplished all that much that was meaningful.

As you’ve probably guessed by now, the right way to think about pricing is to focus on the long term and the big picture. How will the pricing strategies and tactics you’re pursuing today affect your company’s reputation for the next decade? How can you address the root causes of problems so that you never have to deal with them again? How can you structure pricing processes to make the team more efficient every single month? What can you do to make the entire company more profitable?

The very best pricing professionals maintain this perspective even while they’re dealing with day-to-day issues. They’re getting that quote to the salesperson by the end of the day, but at the same time, they’re contemplating ways to fix the process so that the sales team can generate their own quotes without creating an “emergency” for the pricing team.

People with this perspective build things that last. They create strategies that shape the future of their companies. They make an impact on the people around them, and they’re helping the entire firm become more successful.

You can’t achieve this kind of perspective overnight, but it can be learned. And fortunately, PricingBrew has several resources to help you cultivate a more strategic mindset. We recommend starting with Four Ways to Be More Strategic in Pricing. It offers actionable tips for getting out of the tactical weeds and focusing on the big picture.

Next, you should check out The Essence of Strategic Pricing. It explains the difference between tactical and strategic thinking and how to move toward a more strategic mindset.

And while you’re busy becoming a much more effective and strategic pricing practitioner, I’ll be busy researching whether I’ve been  pooping and sleeping the wrong way all my life.

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