How Lucky are you with Pricing?

This week we are reviewing different pricing strategies culminating with our podcast, The Death of List Price featuring Rob Doctors, lead author of the book, Contextual Pricing: The Death of List Price and the New Market Reality.

How Lucky do you feel with your pricing? As lucky as this 19 year-old did on the Price is Right show? To top it off it was his birthday!

Pricing is a strategy that few people master and many even fear. However, we all have to determine a price. The problem that many of us face in today’s market is that a cost plus mentality no longer works.

What we need is a different type of data. Data that we seldom gather. One reason is that internal priorities like accounting take precedence over pricing requirements. Also, managers often do not develop specific requirements for essential pricing data because specificity is challenging, without prior investigation.

From Contextual Pricing:

Consider the purposes of different databases that are the typical building blocks of a data warehouse:

The bulk of data available in corporate systems is captured for accounting purposes, leading to corporate profitability reporting and dividends.

Some data is captured for administrative and human resources.

Customer support purposes seems like the right idea, but much of this data is centered on customers after the purchase and does not focus much on “Why did customers pay this price?”

Data may include market price information, but until recently pricing has been the poor relative al the marketing family reunion. Most of marketing is focused on product, promotion, and channel—not pricing.

Lately, some data has been gathered in systems for sales operations and sometimes for customer prospecting. Often this can be good, but rarely is it complete or compelling insight into customer-decision processes—that is generally left to the individual sales representative.

You do not have to get lucky. Pricing should be a main component and driver of your sales and marketing. Creating pricing structures, is not a mysterious process. It is the context that matters, in one instance cost matters, in some contexts, value matters, in others innovation matters. Synergizing these three views into something that works almost all the time can be done.