Summary:

285 Pages of articles, case samples and quizzes.  A must-have guide for every Product, Marketing and Sales manager.

As the theory goes, it only takes a few minutes and couple of bad reviews to destroy a company, despite taking years to build the brand. So to can pricing destroy a company in a matter of minutes. Get the price wrong, and your company will forfeit thousands, if not millions of dollars. Attempting to correct or re-align a price confuses the customer and erodes both confidence and integrity in any pricing strategy going forward.

There is a common misconception that pricing is a one-off exercise that requires someone in the company to present a price and obtain immediate buy-in – so long as this person’s neck is on the line. This misconception could not be further from the truth. Modern pricing is everyone’s responsibility from Sales to Marking, Finance, Accounting, Operations and Management. Each department plays a key role in creating, capturing and communicating value to the marketplace in order to realize a desired price that matches off against the desired benefits and a fair price/value proposition. The difference between getting the price right is an activity that may only take minutes, hours, days or several weeks by taking an outside-in approach to pricing by talking with your customers to understand how they trade price for your value. The resources, fees, tools and time commitment of obtaining the right price is usually a tiny fraction of the unrealized revenue.

This book is a constant reminder to you that your Price is the most important statement you make about your product. Get it wrong, and you may be in conflict with your company’s corporate goals and objectives. The authors present interesting perspectives to pricing by offering case studies, anecdotes, stories and articles that drive home pricing challenges and opportunities to help guide you towards developing Strategies and Tactics that ensure the “Right” Price is obtained.

Authors:

Michael N. Hurwich

Publisher:

Strategic Pricing Management Group (SPMG) – 2013

Buy Now:
The Joy of Pricing

Summary:

A comprehensive reference for any business professional looking to understand the capabilities and competencies required for effectively managing pricing and profitability, Pricing and Profitability Management explains how to determine the right approach, tools, and techniques for each of six key categories (pricing strategy, price execution, advanced analytics and optimization, organizational alignment and governance, pricing technology and data management, and tax and regulatory effectiveness). Exploring each category in detail, the book addresses how an integrated approach to pricing improvement can give a sustainable, competitive advantage to any organization.

The ultimate “”how to”” manual for any executive or manager interested in price management, the book presents a holistic, comprehensive framework that shows how integrating these pricing categories into a cohesive program leads to impressive gains that cannot be achieved through a single-pronged approach.

• Presents a comprehensive framework for more effectively managing pricing and profitability
• Identities the six key categories of pricing and profitability management
• Shows you how to gain a competitive edge by managing pricing and profitability

Taking a comprehensive view of pricing, companies can position themselves to tap a vast source of shareholder value—the ability to set and enforce profitable prices, not just once, but again and again in response to marketplace changes and evolving business needs—and this book will show you how.

Authors:

Meehan, Simonetto, Montan, Goodin

Publisher:

John Wiley & Sons, Inc. – 2011

Buy Now:
Pricing and Profitability Management: A Practical Guide for Business Leaders

This is the second in a six part blog series on how manufacturers and distributors can apply Six Sigma methodology to the pricing function to generate repeatable margin gains. This blog covers what to consider in defining pricing team members roles and responsibilities and setting properly aligned goals.
All pricing practice leaders know a disciplined process is needed to create and maintain Pricing Excellence.

As we covered in the first blog in the series, applying Six Sigma to pricing is clearly a better way to go to make pricing processes the best they can be – but… How do we get there from here?

The first step requires defining what needs improvement thoughtfully, completely, and in alignment with your business goals.

Before you can begin to set up processes to measure, analyze, control, and continuously improve your pricing processes, one must define what the problem is without stating the solution.

Read complete article here:

Six Sigma Pricing > Define: Set Pricing Team Roles and Responsibilities, Create Goals Properly Aligned with Your Business « Strategic Pricing Pays.

This is the third in a six part blog series on how manufacturers and distributors can apply Six Sigma methodology to the pricing function to generate repeatable margin gains. This blog covers what to consider in building measurements and a metrics plan for pricing team member assessment and incentives.

All pricing practice leaders know a disciplined process is needed to create and maintain Pricing Excellence – how to measure and incent the team to achieve excellence is key.

“Discipline is the defining fire in which talent becomes ability”

    – Roy Smith

Applying Six Sigma to pricing is clearly a better way to go to make pricing processes optimal – but…

How do we measure our progress?

How do we set proper incentives for team members?

This crucial step lays the foundation for success and requires building measurements and metrics to identify what needs improvement thoughtfully, completely, and in alignment with your business goals.

A company must properly identify anything that impacts pricing performance and measure it mindfully. Identifying “Critical to Quality” (CTQ) components for each person’s role in the process is foundational to correct measurements. It is very important to choose wisely which measurement is appropriate for each role and incentives must be tied to these.

Few things have the ability to motivate people more than performance measures tied to their pay and incentives. Focus on a limited set of measurements that are tied closely to profitability and then hold people accountable for their performance against those measurements.

Read complete article here:

Six Sigma Pricing > Measure: Build Measurements and Metrics Plan for Pricing Team Member Assessment and Incentives « Strategic Pricing Pays.

“the first line of price negotiations has been switched to the inside sales team”

Today customers look to inside sales for more.  For instance, for most distributors, the first line of price negotiations has been switched to the inside sales team.  Front line technical support falls on to inside sales to do some logistical matters like expedites, freight issues and invoice clarification.

“Proper pricing can improve the inside sales role.”

Proper pricing can improve the inside sales role.  First, without a well-developed pricing system, inside sales teams devote lots of time looking up last prices paid and checking on price levels with their outside sales counterparts.  Inside sales should be trained to spot poorly maintained price files and provide the feedback required to get these fixed.

“inside sales people should learn a few basic negotiating tricks to avoid being “duped” by procurement”

Second, inside sales people should learn a few basic negotiating tricks to avoid being “duped” by procurement professionals who have been trained in the science of negotiation.  If you have not yet see the information provided by Strategic Pricing Associates or their sister company SPASigma, we recommend you check out this really funny video.

Read complete article here:

SPASigma Featured in The Distributor Channel article “Sales Training for Distributors – Don’t forget Inside Sales” « Strategic Pricing Pays.

SPASigma was featured in a recent The Distributor Channel article “Why do customers buy? Questions and Comments”. The article is a review of the Industrial Distribution Magazine’s annual survey which focused on a distributor’s value to its clients. The article addresses the root causes of the fact that over 50% cited “Price” as the answer on the survey when asked “Which are the primary reasons your customers do business with you?”

“Price, really are you kidding me?“

According to over half of the survey respondents, customers are buying from them because of price.  In other words, they see their value as the low cost discount leader.  I wonder, if this is a response flavored by the responses of those involved in sales, does their management see things this way?  Over the course of several hundred (probably over a thousand) detailed conversations with distributor owners and top-level managers, I have never heard any of them say, “We are striving to be the low cost leader in our market.”  Instead they talk about solutions, technology and great customer service.

Reviewing the list above, one would wonder if some of the same distributors touting price as a customer attractant aren’t also investing in technical services, engineering skills, support and improved logistics.

I believe the price focus and the services focus are inherently incompatible.

“Why price is even mentioned at all?“

Purchasers constantly push for price.  Distributor salespeople are told, “Your price is too high in dozens of ways.”  Friendly customers give the seller a “last look” where they are allowed to beat the price of some real or imagined competitor; the message is price got you the order.  Not-so-friendly folks mask preference for other suppliers with “your price was out of the ball park, this time.”  The message often plays over the top of technical services and sounds like this, “Your service is great, but all of our suppliers provide the same kinds of things.”

We have already stated buyers constantly test our price.  This creates a repeated message: price is important.  Scientists tell us when messages are repeated the message becomes believable; the thought develops an aura of truth.  When the message is repeated by many people, the directive appears as an absolute truism.  Psychologists call this the “validity effect” and distributor salespeople respond like laboratory guinea pigs.

Read complete article here:

SPASigma Featured in The Distributor Channel article “Why do customers buy? Questions and Comments” « Strategic Pricing Pays.

Leverage Six Sigma Methodology to Drive Continuous Margin Improvements

A disciplined process is needed to create Pricing Excellence – SPA’s Six Sigma training drives real results focused on profitable growth.

“Measure of success at strategic pricing is not how much it increases price but how much it increases profitability.”

Thomas Nagle – Professor, University of Chicago

Current State of Pricing

• Limited negotiation skills
• Cost + pricing
• No analytical tools
• No profitability improvement plans
• Sales rep discount vs. sell
• Reactionary pricing tactics
• Inconsistent pricing structures
• No growth in GM%
• Ignores market reality
• No strategy to improve margins

Six Sigma Pricing

• Negotiating strategy and tactics
• Value-based pricing
• Automated decision making tools
• Customer Profitability improvement plans
• Sales team selling value
• Pricing strategy and leadership
• Consistent and fair pricing architecture
• 2 to 4% growth in GM%
• Pricing based customer sensitivity
• Continuous improvement focus

So clearly the latter is the better way to go – but… How do we get there from here? What are the steps and areas of focus that will get us there successfully?

…

Graduates from this course will learn to chart a clear path to pricing improvement. They will learn each of the following steps:

• How to design and design goals which are consistent with their company’s pricing strategy.
• How to measure and identify characteristics critical for pricing success.
• How to analyze the current situation and steps along the way.
• How to design an improved alternative which moves closer to the desired result.
• How to verify that actions taken create the right results.

Read complete article here:

Strategic Pricing Associates, Inc. – Six Sigma Pricing.

This is the fourth in a six part blog series on how manufacturers and distributors can apply Six Sigma methodology to the pricing function to generate repeatable margin gains. This blog covers the importance of effective analysis of the right measurements and metrics to identify the root causes of defects in your pricing process.
All pricing practice leaders know a disciplined process is needed to create and maintain Pricing Excellence – effective defect analysis must cover these five areas which can be major sources of variation across commercial processes:

• People
• Information
• Tools / Systems
• Environment
• Methods

This crucial step leverages the measurements and metrics you have mindfully constructed to identify what needs improvement and what/where are the sources of defects in the process.

A company must properly analyze anything that impacts pricing performance and then use these insights and data to make meaningful improvements that will help you achieve your business goals. The following lays out some effective methods for the analysis phase.

Read complete article here:

Six Sigma Pricing > Analyze: Identify and Understand Opportunities to Grow Margins and Create Reporting Tools to Identify Defects « Strategic Pricing Pays.

This is the fifth in a six part blog series on how manufacturers and distributors can apply Six Sigma methodology to the pricing function to generate repeatable margin gains. This blog covers the importance of driving incremental improvements through building processes, systems and tools to assist teams and create reporting tools to track improvements.

All pricing practice leaders know a disciplined process is needed to create and maintain Pricing Excellence – to effectively drive incremental improvements your team must focus on these four areas:

1. Build process, systems & tools to assist team in exceeding their goals. (Automate at all cost)
2. Hire based on foundational skills versus experience
3. Train teams on key foundational skills that they will need to exceed their goals.
4. Create reporting tools to track improvements

…

Hiring and Training

The real key to long-term success and to achieve Pricing Excellence – people. Always choose character over experience. Pricing is hard and you will train them to make excellent pricing decisions but they must have some core traits. Leadership, communications skills, and an analytical mind are the three most important traits. Quantitative, numbers driven decision makers such as former military academy grads, quantitative undergrad (Finance, Accounting, Physics, etc.) majors who also participated in a team sport, and yes even select sales people in your own company make great pricers.

Read complete article here:

Six Sigma Pricing > Improve: Build Processes, Systems and Tools to Assist Teams & Create Reporting Tools to Track Improvements « Strategic Pricing Pays.

In the Control phase, our job is to make sure the improvements we have put in place – stay in place. To achieve this you want to chart performance against upper and lower control limits. Run charts show single values plotted over time and indicate trends of process & shifts in process performance.

The key to success it to continuously monitor performance and measure against the control limits via Control Charts which allows you to:

1. Study process variation over time
2. Monitor and improve process performance
3. Maintain “In-Control” processes

Additional benefits of The Six Sigma Pricing Control phase include:

• Developing an effective “Control Plan Audit Process”
• Identifying opportunities for improvement in processes, tools, and or behavior
• Establish a “Pricing Authority Matrix”
• Develop “Profitability Improvement Plans” for every customer
• Developing Change Management strategies and plans

…

Six Sigma Pricing related articles:

• Inside SPA: A Chat With a Six Sigma Master Black Belt on Pricing
• How to Leverage Six Sigma Methodology to Drive Continuous Margin Improvements
• Pricing Professional – The time has come
• SPA Six Sigma Pricing Program

Read complete article here:

Six Sigma Pricing > Control: Set and Enforce Pricing Authority Levels and Repeat Previous Steps « Strategic Pricing Pays.

A disciplined process is needed to achieve Pricing Excellence – SPA’s Six Sigma Pricing training drives real results focused on achieving profitable growth.

Measure of success at strategic pricing is not how much it increases price but how much it increases profitability.
Thomas Nagle – Professor, University of Chicago

Six Sigma Master Blackbelt, Greg Preuer, of SPA has created a unique course designed to apply time tested Six Sigma methodology to pricing.  Those who complete the course will learn not only how to systematically drive their company’s pricing processes towards excellence but how to sustain the gains and automate the process.  They will also become Six Sigma experts (Blackbelt) in business process with a focus placed squarely on price management best-practices.

Graduates from this course will learn to chart a clear path to Pricing Excellence.  They will learn each of the following steps:

Click here to learn how to realize the benefits of SixSigma Pricing Process by enrolling into our online course.

Date: Tue, 1 May, 2018 | 9:00 am – 4:00 pm

Location: PPS Spring Conference | Loews Chicago O’Hare Rosemont Hotel in Chicago, IL

DESCRIPTION

Value-Based Pricing and Differential Value Quantification: Best Practices to Understand, Apply, and Operationalize in Your Organization

(Level 600 Workshop)

More firms and their pricing leaders are embarking on value-based pricing strategies every year. Research shows increased adoption from 17% of firms in 2008 to about 25-30% of firms in 2016. Part of the deployment process of value-based pricing is the implementation of the Economic Value Estimation® (EVE®) process to quantify differential value. While adoption of value-based pricing and the implementation of EVE® is increasing, pricing professionals still face difficulties in designing and executing value-based pricing strategies and particularly executing the EVE® methods across their organizations.

In this unique one-day workshop, we go through the latest science on value-based pricing and on the EVE® process. We also review how to operationalize the outcome in value-based innovation, value-based marketing and value-based selling strategies. This is a unique and powerful workshop to learn theoretical and practical dimensions of EVE® and value quantification. Participants will also receive a signed copy of the “Dollarizing Differentiation Value” book as well as an eBook called “A User’s Guide to Value Modeling.”

Attendees will learn:

• How to operationalize value-based pricing and EVE® in your daily business and track that your approach is successful
• How to practically link value-based pricing with value-based innovation, value-based marketing, and value-based selling
• How to use multi-functional collaboration to accelerate deployment of value-based pricing

INSTRUCTOR

Date: Wed, 2 May, 2018 | 9:00 am – 4:00 pm

Location: PPS Spring Conference | Loews Chicago O’Hare Rosemont Hotel in Chicago, IL

DESCRIPTION

Price Execution for Sustained Profitable Growth

(Level 500 Workshop)

Many companies find themselves ill-prepared to handle disruption or tap into innovation opportunities due to a legacy of weak pricing execution. New product introduction, organizational redesign, big data solutions, and other strategic investments – all of these critical functions can fall short without solid price operations.  Customers frame their perception of value received or procurement risk based on their vendors’ ability to execute pricing. Given the ever-changing marketplace, even smart companies need to adapt quickly with continuous price improvement.

However, companies have far more control over their pricing operations than they realize. In the workshop Pricing Execution for Sustained Profitable Growth, we will discuss a breakthrough approach for superior execution, one that can systematically eliminate pricing-related risk or leaks to bring new profits straight to the bottom-line without alienating customers. In this workshop, our discussion will include a holistic organizational approach for keeping senior management engaged while dismantling functional silos with the spirit of continuous improvement.

Attendees will learn:

• How to find the Hidden Pricing Factory within your organization
• How to secure trust and organizational support with evidence-based assessment of the overall pricing capability
• How to align pricing operations with your pricing and sales strategy

INSTRUCTOR

Date: Tue, 1 May, 2018 | 9:00 am – 4:00 pm

Location: PPS Spring Conference | Loews Chicago O’Hare Rosemont Hotel in Chicago, IL

DESCRIPTION

Successful Transformation for Strategy Optimization

(Level 300 Workshop)

Most organizations have objectives to improve their results for profit, volume and market share, but not all of them are really leveraging the most powerful lever for attaining these goals.

In Successful Transformation for Strategy Optimization, Commercial Effectiveness, and Pricing Excellence, pricers will learn the concepts, best practices and methodologies that have been proven effective in creating successful pricing transformation journeys. We will review these tactics by examining five real-world business case studies from across five different industries (Pharma, Heavy Machines, Distribution, Software Services, and Banking) and diverse global markets (Germany, France, Sweden, Italy, and UK). We will then use the lessons learned in these transformation examples to help attendees identify key challenges, solutions and recommendations for their own unique pricing transformation journeys.

Join us in moving beyond the theory as we connect with case studies from top professionals in different industries on their transformation journey to extract lessons learned.

Attendees will learn:

• The concepts, best practices, and methodologies proven successful in transformation journeys
• From 5 real world business cases across diverse industries and global markets
• To expose key challenges and obtain pragmatic and successful solutions, insights and recommendations

INSTRUCTOR

For a pricing strategy to be truly successful, it must be a “win-win-win” for sales, marketing, and finance. This calls for a revenue and margin balancing act consistently performed over time. Vistaar’s SmartQuote  pricing software enables pricing strategies and tactics to efficiently and rapidly adapt as market conditions change. SmartQuote is powered by advanced machine learning techniques which ensures that your pricing strategy is continuously aligned with market conditions as well as internal financial goals.

Want to learn more? We will be at the Spring 2018 Professional Pricing Society (PPS) conference in Chicago on May 1-4. Visit us at our booth for an update on Vistaar’s SmartQuote, the world’s leading price management software solution.

How SmartQuote Enables Pricing Excellence:

1. Truly balance revenue and margin goals:

SmartQuote’s unique price guidance framework balances both a customer’s willingness-to-pay and your pricing strategy objectives to enable better and achievable prices. SmartQuote’s ability to leverage advanced pattern recognition along with dynamic guidance means that every price recommendation is relevant now, as well as into the future.

Read complete article here:

Machine Learning—a “Next Level” Pricing Element | Paul Greifenberger.

Commodity market fluctuations that whipsaw product margins are a persistent downstream pricing challenge.

• Should you take price now, incrementally, or eat the cost change?
• What will your competitors do?
• How many times can you change customer pricing this year?

Get it right or you risk locking your margins into that corporate “unhappy place.”

If you’ve mastered the market cost vs. price balancing act, congratulations. But will your mastery hold up during a tariff trade war? Tariffs force the pricing challenge to account for market bending change, and for predictive models to go “out the window.” You need to be prepared when senior management asks…

Read complete article here:

Can Tariffs Disrupt Your Pricing Strategy? Short answer: YES! | LinkedIn.

There is a growing focus among pricing practitioners to use price science to drive pricing decisions. It’s a fabulous trend with many recent innovations in the use of advanced techniques such as machine learning and AI. It is important however to consider behavioral economics because our economic decision making is often shockingly irrational. Naturally, we are not referring to your personal decisions, dear reader, because you are always rational, right?

Consider a recent TED presentation by Dan Ariely, Professor of Psychology and Behavioral Economics at Duke University, Are We In Control of Our Own Decisions? Professor Ariely shows a number of highly engaging examples of irrational decision making that includes an intriguing pricing study.

…

Incorporating behavioral economics into pricing models can be achieved by the scientific method in a process that consists of (1) domain experts conjecturing a hypothesized strategy, (2) surveys conducted to get market feedback on the hypothesis, (3) price experiments (e.g., A/B testing) executed in a representative market, and (4) learnings used in training data for ML algorithms and AI model definitions. Repeating the process then becomes a positive cycle of learning, anticipating buyer behavior and optimizing strategies.

Another perspective on behavioral economics is provided by Tom Brzezinski in a Vistaar webinar: “The Psychology of Pricing: Is a Penny Just a Penny?” He examines how customers perceive value and pricing. Tom has over 30 years of pricing experience, and he relates that experience to key topics focused on the question—what drives one customer to accept a price increase and another to buy your competition?

Read complete article here:

Behavioral Economics Powered by Machine Learning and AI Techniques – Pricing Matters.

DESCRIPTION

(Level 600 Workshop)

Data is the new gold. Consultants and scholars agree that trillions of dollars in value are going to be generated thanks to the digital revolution taking the B2B and industrial worlds by storm. More than 80% of firms have embarked in some type of digital transformation placing big data analytics at the heart of their digital strategies. Despite this tsunami of activities, Simon-Kucher & Partners (SKP) reports that 3 out of 4 firms that invested in digitalization in the past 3 years fail in their efforts due to the lack of monetization strategies, the focus on the wrong priorities, the lack of customer intimacy, and the neglect of digital pricing best practices. In fact, only 18% of these firms are true digital heroes.

While the business potential of big data is attractive, there are some fundamental go-to-market considerations that require breakthrough thinking and a strong focus on value and pricing management. During this workshop, Dr. Liozu introduced on a practical data monetization road map which addresses all these considerations. Based on dozens of interviews with industrial natives
and 18 months of research on the topic of data monetization and the value-based pricing of data, Dr. Liozu makes a case for a more agile, customer-centric, and value-based approach to data monetization.

Attendees will learn:

• The various monetization and value creation models for data-enabled offers
• The 8 steps of the data monetization framework
• The best practices in designing differentiated data-enabled offers
• The value-based pricing of data and options in digital pricing models
• Business model implications of switching from ownership to consumption model

INSTRUCTOR

Keep up with the latest pricing news, events, and other resources via LinkedIn here.

Find upcoming pricing training events here.

The following are a few of our favorite recent pricing shares and discussions on LinkedIn.

Modern pricing software easily simulates the margin or revenue impact of any potential price changes so that pricing managers and leadership can decide based on expected impact as opposed to hoping for the results. Manipulating multiple spreadsheets to calculate potential price impact outcomes is not only frustrating but increases the risk of inaccuracy for every step.

There can be a great deal of work behind the implementation of price changes. Modern pricing software automates the act of updating price lists and agreements and publishing to ERP systems to enable companies to move quickly. So, when the time comes, changes can be made immediately and accurately.

The quickness and accuracy of pricing software enable pricing teams to easily consider competitive pricing strategy responses in times of looming tariffs. Now, pricing teams can plan alongside the government as they consider tariffs and prepare multiple attack plans before it could become policy.

So, don’t let your pricing strategy become a causality due to potential market bending changes. The difference between success and failure lies in the access to the right technology combined with a proven methodology. Pricing technology, much like the OODA loop model, allows pricing and leadership to be nimble, assess the ever-changing pricing landscape, and adapt quickly so that they will get through this potential pricing challenge and be prepared for the next.

Read complete article here:

Tariffs: Fighter Pilot Strategies Businesses Can’t Afford to Ignore –.