Pricing: The Eternal Corporate Bridesmaid?

When it comes to navigating margin challenges, businesses have a variety of levers to pull—sales, financial management, product development, operational transformation, and, of course, pricing. Yet, it never ceases to amaze me how often pricing is like a neglected child, receiving far less attention and fewer resources than its more glamorous siblings (perhaps stretching the bridesmaid heading somewhat). Not only that, but any pricing initiative is usually received with significant resistance from within the organisation, becoming a political football that stymies corporate alignment.

?The Stars of the Corporate Show

·?????? Sales and Marketing: My wife works in advertising, and believe me, there's no shortage of investment or effort in reaching customers. Working with a global FMCG giant, I was struck by how their Sales and Marketing teams had an arsenal of analysis and BI tools at their disposal, while the rest of the company struggled to pull basic reports.

?·?????? Operations: With a background in strategy and operations consulting, I've seen firsthand the relentless focus on production, procurement, and logistics efficiency. There's always a digital transformation project in the works, and no shortage of consultants eager to help.

?·?????? Product Development: Product development, like pricing, often lacks a clear functional home, with responsibilities split between R&D, Quality, and Engineering. However, the spotlight is always on New Product Introduction (NPI), with little to no interest in phasing out old products, which only adds complexity and fuels portfolio cannibalisation.

?·?????? Financial Management:? I've seen organizations blow through enormous budgets on new ERP systems, even when the existing ones were perfectly fine but poorly implemented. The finance team typically champions these investments, while the rest of the business looks on in bewilderment at the disruption and cost.

?The Neglected World of Pricing

?So, why isn’t pricing treated with the same level of importance? The investment and effort required to make pricing a success often fail to materialize. I've worked with clients across various industries—travel, leisure, distribution, FMCG, medical devices, and manufacturing. One client, a billion-dollar distributor with 300,000 SKUs, hasn't invested in a meaningful pricing team (thinking 3 FTEs can handle this scale is laughable). The result? Margin leakage that they can't effectively address.

?The Four Culprits Behind Neglected Pricing. After discussing with colleagues, I believe there are four main reasons for this lack of focus on pricing within most businesses:?

1.????? Data Deficiency: Pricing is extremely data-intensive, and most organizations simply lack the people, infrastructure, and analytical capability to tackle it confidently. Without solid data, there’s no insight to feed the business and inform commercial decisions. While many companies boast data lakes or warehouses, the data is often uncurated, full of gaps, and overwritten frequently. This chaotic state turns pricing into a political football, with sales teams often left holding the ball.

2.????? Organizational Silos: Companies are rife with silos, causing pricing to float aimlessly between functions, each with its own agenda. For instance, a large holiday business saw its finance team raise prices by 10% across the board to offset inflation. The result? Demand plummeted in some segments while others sold out. Often, sales are left to their own devices, creating a complex, gut-feel patchwork of promotions and discounts where non-core clients sometimes get the best deals.?

3.????? Strategic Missteps: Inflexible pricing policies and weak controls often shape pricing strategies. One major client tried implementing dynamic pricing, aiming to educate customers to order early or pay a premium later. This backfired spectacularly—prices changed 40-50 times, and the Commercial Director was stunned when we pointed out that their "smart" pricing algorithm was causing 15-20 direction changes.

4.????? Competitive Blindness: It's astonishing how few businesses consistently understand their competitors' commercial strategies and pricing activities, relying instead on sporadic reports from sales or the occasional junior analyst checking competitor websites. This ties back to the data issue, where competitor capture is often immaterial and strategically pointless. We've helped travel businesses track competitor products and prices over several years, uncovering valuable tactical opportunities and long-term strategic insights.

?Steering Pricing to centre-stage. To elevate pricing from the sidelines, businesses must take deliberate steps:

?·?????? Invest in Data and Analytics, with a commercial focus. Build robust data infrastructures and leverage advanced analytics to drive informed pricing decisions.

·?????? Break Down Silos. Foster cross-functional collaboration to create cohesive pricing strategies aided by a ‘one version of the truth’ commercial DWH

·?????? Develop Flexible Pricing Strategies. Implement dynamic pricing models that can adapt to market changes and consumer behaviour in real-time.

·?????? Monitor Competition Continuously. Establish systematic processes to track competitor pricing and strategies, using this intelligence to inform your own pricing actions.

?By addressing these issues, companies can transform pricing from an overlooked function to a strategic powerhouse, driving margin improvements and long-term success. Pricing doesn’t have to remain the eternal bridesmaid; with the right focus and resources, it can finally take its rightful place at the corporate altar.