«Why executives should make pricing their personal mission I magine a world in which over 80% of companies have come under increased pricing pressure, ...»
T he Global Pricing Study 2012 showed that over 80% of companies face intense pricing pressure from competitors and customers, on top of the risk of inﬂation from volatile commodity prices. This underscores the urgency for C-level executives to intervene now. Staying in a pricing “comfort zone” is no longer an option.
However, this greater emphasis on pricing and the accompanying organizational changes are not merely short-term survival mechanisms. Generating and harnessing pricing power is one thing. Sustaining it is another, and should be a true source of competitive advantage.
Executives should not retreat back into pricing “comfort zones” when economic growth returns to historical levels. As an executive, the attention that you pay right now – and the organizational changes you set in motion – will reward your company even more when growth picks up.
How should you make this commitment? That is where the four-part change mandate comes in, based on ﬁndings and insights from the Global Pricing Study 2012 as well as
Simon-Kucher & Partners’ benchmarks and experience:
• Establish and enforce clear accountability for pricing strategy
• Support the development of a pricing organization with transparent pricing processes
• Ensure that revenue models reﬂect both the value their business units deliver and the costs they incur
• Communicate their pricing strategy and pricing identity, as the company’s pricing ambassadors, internally and externally You need to focus your attention on all four areas, which all serve to build greater accountability, stronger internal structures and processes, revenue models that reﬂect the value you deliver, better communication, and ultimately, higher pricing power and correspondingly higher proﬁts.
Georg Tacke, Ph.D., is the CEO of Simon-Kucher & Partners, the world’s leading pricing consulting ﬁrm.
David Vidal is a partner in the ﬁrm’s Paris ofﬁce.
Annette Ehrhardt is a senior director in the ﬁrm’s Zurich ofﬁce.
The Key to Higher Proﬁts: Pricing Power - Page 27