The Last Mile of Pricing
I had a fascinating conversation with a potential customer this week.? He essentially said, “We care about pricing.? We have taken a lot of pricing courses.? We know about value-based pricing and price segmentation.? But nothing changes because the salespeople don’t change.? We need our salespeople to sell the value of our products, not just the features.”??
He made many other comments that were also brilliant, but let’s focus on this one.? Pricing is a team sport.? It doesn’t matter how well you set your prices or your pricing strategy.? If your salespeople can’t execute the strategy, your average selling price doesn’t increase.? This is the last mile of pricing.
Hopefully, the team that set the prices used Value-Based Pricing, meaning they focused on how much value buyers should expect to receive as they set the prices.? So why don’t they help the salespeople understand value???
The pricing team should be examining and building pricing strategies around relatively stable contexts.? For example, they may set different pricing by industry or geography.??
But, the sales team is in the unique position to recognize and leverage the dynamic contexts that affect an individual buyer’s willingness to pay.? They need to know how to look for more value, how to identify buyers with high WTP.? Most importantly, they need to communicate that value to the buyer so they can win at higher prices.??
How are you measuring the success of your pricing?? If it’s by price increases, that’s only internal.? If it’s by price increases achieved, that’s brilliant.? But you can’t achieve price increases unless the sales team is able to win at those prices.? Pricing is a team sport.? Helping sales is part of the job.? Let us know if you would like some help.? It’s what we do.?
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Senior Director at Tebra
3 周Mark Stiving, Ph.D.: Completely agree with Barry Edney’s comment here. Was part of a corporate “evangelization” of value-based pricing and selling several years ago where a small core of champions were tasked with bringing value to the forefront of our business units. My executive sponsor was a pricing guru, and I was a strategist with a little OB hobby. We saw so many “silos” that were openly joked about and part of the culture. We created our own “silo” called the “value silo” and included the GTM functions. We used a technology platform to get product, finance, marketing, and sales together to build our value propositions and stories TOGETHER. No genius here… totally by accident and experimentation. However, the result were powerful tools that reps actually used because they believed in their own work. They were about our value creation teams, but they were not for them. They were for reps and ultimately customers. Drove about 10% higher win rates with around 15% higher profitability. Teams matter!
CEO Ibbaka Performance - Leader LinkedIn Design Thinking Group - Generative Pricing
1 个月This is why value based pricing requires value stories for execution. And why sales needs to be supported with a way to consistently present the stories and gather data for their improvement.
Retired!
1 个月I see price effectiveness as a combination of many factors - price administration (setting the pricing), price compliance (getting the price), and the effect of pricing on volume/growth. It is often tough to separate the specific impact of pricing decisions on overall performance. Promotions, clearance/dead items, deals, seasonal patterns, customer churn and other special factors can make measurement and validation difficult. If it's possible to isolate the data and do same-customer, same-item sales versus prior year, it can help validate actual performance, but you have to make sure the other factors are not more relevant than the price assigned or the discount behavior.
Business partner in providing right pricing and business strategy to maximize success in every given opportunity.
1 个月Valid point Mark. Sales are the connector between both side of the business. Pricing considered successful in my opinion when the price get its fair value, enable business profitable and client accept the price align to the service provided.
Pricing Strategist | Enabling Peak Performance? | Transforming Leaders into Value-Based Decision Makers | $20.1M+ in Price Realization
1 个月Love it. I have found that commercial training can greatly help the pricing professional in terms of mindset. Some experience in sales is even better. As you point out, it’s a team effort. There is no place for a us vs. them attitude. I agree that capturing net price realization is a skill that can be learned and developed.