October 25th 2010
Does finance still set your prices? Pricing panel part 7.
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Does finance still set your prices? If this is true, its time to get into a more recent century. Along with this, lazy companies often set their prices as cost plus – which according to Thomas Nagle, under prices for some customers while penalizing others. In my experience cost plus pricing was used to set a list price, which no sales guy ever followed. Every customer received some form of discount along the way from order to delivery. Forrester tells us 95% of customers get a discount.
Another sin is being unable/unwilling to track all initiatives, contracts, and discounts all the way through each transaction. This is used in the concept of a price/margin waterfall. In essence the company does not really know how much profit it received from every transaction. How do you know which clients are “at risk” for being poached and which ones are chronic “outlaws” in getting maximum discounts if you do not track full transaction margin? Bringing some up to date financial controls to this area will result immediate profit uptakes. Plus Finance will be able to play a proactive role in your pricing strategy.
Related articles
- Pricing survey indicates you are dropping prices, but for the right reasons? Part 1. (regnordman.com)
- The Strategy and Tactics of Pricing. A guide to growing more profitably. Thomas T. Nagle, John E. Hogan, Joseph Zale. (regnordman.com)
- Practical Pricing. Translating pricing theory into sustainable profit improvement. Michael Calogridis. (regnordman.com)
- Does Price Matter Most? (businessinsider.com)
- The Impact of Finance on Business Growth (thinkup.waldenu.edu)
- What generates the highest profit margin, product or service? Pricing part 3 (regnordman.com)
- Pay Cash, Get Discount? (online.wsj.com)
- Customer history, is it helpful in raising prices? Pricing part 5. (regnordman.com)
- When does the customer first ask about price? Pricing part 2. (regnordman.com)
- Should the “Competitive Leadership Model” Really Be “The Value Leadership Model”? (leveragepoint.com)
- Is price raised at the beginning of your sales process? Pricing panel Part 6. (regnordman.com)
- Pricing Strategy for Rainmakers (avantrasara.com)
Similar Posts:
- So what can a CEO, Marketer, Salesperson, or CFO do to improve your pricing? Pricing part 11
- Pricing survey indicates you are dropping prices, but for the right reasons? Part 1.
- Sales’ response to a price rise. Pricing part 9.
- Training your customers for regular price increases. Pricing part 12
- Your Company culture often works to resist raising prices. Pricing part 4
Category: Finance, Management, Pricing, Technology Industry
