Pricing: A Multidimensional Challenge

A sound pricing strategy also considers...

Pricing is best viewed from three perspectives: strategy and optimization, management and execution, and monitoring and enforcement.

• Strategy and optimization takes into account issues such as how much an organization should charge for a product or service, and how prices might be adjusted according to customer segments, channels, and demand.  A sound pricing strategy also considers the best time to promote an item or service, how much (and what type) of a discount should be applied, and how goods and services might be bundled.
• Management and execution oversees more tactical tasks, such as ensuring that ll of a company's stores are charging the same price for the same item (and if not, why?) confirming the most profitable products and services, verifying that promotional strategies are in line with price discounts and targeting the business's most profitable customers.
• Monitoring and enforcement tracks ongoing issues such as whether or not customers are paying the right price, adhering to appropriate terms, and receiving the right discounts; ensuring employees are aware of and applying pricing guidelines; examining areas that are draining revenue; and tracking sales force incentives/behaviors against corporate goals.

ACTION POINT: Build your pricing strategy around the three key areas above.