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Two Keys To Make Pricing an Executive Priority

For executives tasked with high-level strategic goals to improve the overall profitability of their company, pricing initiatives seem to be commonly overlooked. After all, price is solely the domain of pricing specialists and sales reps who take prices to market. Right?


Price is the most powerful profit lever a company possesses. Optimizing prices to align with the market is a task that C-level executives can and should actively take part in.

In fact, a recent study by Simon-Kucher found that CEOs who pay attention to pricing are 30 percent more likely to expect strong EBITDA growth over the next three years.

Yet, there are far too many manufacturers and distributors still using “cost-plus” and/or “list minus” rules-of-thumb, or outright guesswork, to guide their day-to-day pricing decisions. As a result, there’s typically a lot of room for improvement in this area and most companies have barely scratched the surface of what’s really possible when it comes to profitable pricing in their marketplace.

Massive gains in profitability can be reaped from additional pennies and nickels captured across millions of line-items. A brighter way for executives to close the gap between profitability goals and the decisions made on the frontlines each day is to make better pricing a strategic priority, and lead the change in the organization.

First, ensure that the new pricing initiative enables senior management to drive the desired P&L results and clearly measure the financial impacts of those pricing decisions. A solution that offers the measurement of pricing impact on the P&L and allows strategies to be adjusted accordingly is key. Very few pricing initiatives include this kind of closed-loop measurement, so getting involved early can ensure a wise choice.

Second, make education and communication a priority. New pricing initiatives hold promise to transform a business, but without adoption, they can fall flat. Constantly and consistently explain the benefits of the initiative to gain buy-in across the entire company. Showing support from the top-down is the first step to drive consensus and adoption.

Make better pricing a priority. Your support is the step to gaining pricing power and capitalizing on your most powerful profit lever.

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