Pricing is about creating and capturing value by optimizing revenue and profitability on every sale.
Improving how your organization sets and manages pricing can deliver huge financial gains.
For most organizations, a small 1% improvement in price yields an 11% - 13% improvement in margin. No other lever comes close.
Great read on the impact of a 1% price improvement
The fastest and most effective way for a company to realize its maximum profit is to get its pricing right. The right price can boost profit faster than increasing volume will; the wrong price can shrink it just as quickly. Yet many otherwise tough-minded managers shy away from initiatives to improve price for fear that they will alienate or lose customers. The result of not managing price performance, however, is far more damaging. Getting the price right is one of the most fundamental and important management functions; it should be one of a manager’s first responsibilities, a nuts and bolts kind of job that determines the dollar and cents performance of the company.
So how do you actually get better at pricing?
Companies grow by acquiring, monetizing and retaining customers. Out of the three growth drivers, monetization or pricing focuses on your organization's ability to create and capture value. To price effectively you must know how you deliver value to customers.
This is how the leading minds in business think about pricing
“The single most important decision in evaluating a business is pricing power, if you’ve got the power to raise prices without losing business to a competitor, you’ve got a very good business. And if you have to have a prayer session before raising the price by 10 percent, then you’ve got a terrible business.” Warren Buffett