Companies across the globe are realizing the value of pricing and doing whatever they can to reap the benefits from an increased focus on pricing. However, it is truly the leading-edge companies out there that recognize the fact that pricing is not just a business function, performed by those that need to be involved. Pricing is a complex business process that must have the correct support and guardrails around it. You would not implement new SOPs without training, support, and feedback… why should pricing be any different?
True, leading-edge companies already have this figured out as they are investing in pricing for the long-haul. You should be no different. If you bring thought leadership to your customers through your products, why stop there? You need to look at the support mechanisms, training programs, and business policies that must be enacted in order to have a successful pricing initiative. This is not simple and it takes various business units agreeing to change for the mutual benefit of the company. After all, if it were simple, you, as would have most companies, would have already figured it out and pricing would not have the immense returns that I have seen time and time again.
For example, one company I worked with forecasted profit improvements of $10 million (or 4%) in the first year after a project. They had a complex algorithm designed to monitor and track results directly related to improved pricing process. Well, like almost any initiative, delays crept in and the economy took a turn for the worse. During a re-assessment period, they downgraded their expected returns to only $4 million in the first 7 months after go-live (due to the 5-month delay). After only 6 months, they had tracked nearly $9 million in incremental profit! Incredible! These results were due to their constant drive for improvement, but also understanding that they needed trained, dedicated pricing resources to help find, articulate, and act upon pricing opportunities, with increased profitability in mind.
Simple question, what are you currently doing to realize ROI in 6 months and even 12 months? Pricing initiatives have that return, and have proven this fact time and time again. But the desire and determination must be there and it will not be simple. However, with the right people, processes, and software in place, finding 150 basis point margin improvement in 6 months and sustaining that gain is not far-fetched. In fact, it is probably understating the true gains.