In large organizations pricing is everybody’s problem, but everybody looks at the problem in a different way. Salespeople earn a livelihood by offering their customers prices that result in completed sales. Account managers have to keep track of tens of thousands of price rules governing products, brands and customers. Bean counters in the finance department are concerned about the relationship between prices and costs. C-suite executives are motivated by how price contributes to the market share, revenue growth and profitability numbers they have to report to their shareholders every quarter. And somewhere in the organization somebody is clamoring for a “just this once!” exception to some pricing policy in order to achieve an immediately pressing milestone.
These are all valid concerns. The problem is that the decision makers are sitting in different parts of the organization, their objectives are often in conflict with each other (or at the very least require trade-offs and compromises), and they are not armed with sufficient information to understand the broader impact of each price decision on firmwide performance. Continue reading