A pricing strategy and supporting pricing processes are critical for every organization. Managing the pricing process is complex and requires active management of the entire pricing lifecycle. With so many departments, processes, and factors in play, how do you determine if your pricing process is broken? To help you answer this question, the author has compiled the 10 most common symptoms of a broken pricing process discovered from working with some of the largest organizations in the world. Author Dan Fatigato is the Sr. Content Marketing Manager at Zilliant. He can be reached at daniel.fatigato@zilliant.com.

The Pricing Advisor, April 2024

Pricing is The Most Strategic Process in Your Business

A pricing strategy and supporting process are critical for every organization. It affects brand, buying and selling experiences, and of course, financials.

Managing the pricing process is complex. It touches many departments, such as sales, marketing, product, and finance, and is often fractured across multiple systems including spreadsheets, ERP, CRM, and other siloed systems. However, to drive profitable growth, businesses must manage their full pricing lifecycle as a cohesive and seamless process.

The first question we usually get is, “How do I know if my pricing process is broken?”

To help you answer this question, we compiled the 10 most common symptoms of a broken pricing process which we have discovered from working with some of the largest organizations in the world.

10 of the Most Common Signs of Broken Pricing Processes

Do any of these apply to your company? If so, you likely have a broken pricing process that is impacting your brand, buying processes, revenue, or margins.

1. Long deal cycles due to bloated pricing approval times put companies at risk of losing out on a deal to faster competitors before the price is even considered. This means lost revenue and wasted resources spent pricing a deal that never saw the light of day.
2. No single source of pricing truth across the entire product portfolio. Many companies pull product data from multiple price lists or ERPs for a bundled or consolidated quote, which takes time and often results in inaccurate pricing.
3. Disconnected pricing strategy between finance, product, and sales results in a lack of clarity on the business’ overall pricing approach because every department has its viewpoint. For pricing to truly act as a strategic lever for growth and profitability, all departments must be aligned.
4. Inconsistent pricing across channels is a major problem as more and more customers expect a seamless experience whether they are browsing online, communicating via email, or speaking on the phone. If your prices fail to serve the expectations of omni-channel buyers, customers and prospects will move elsewhere.
5. Missed upsell opportunities are common among companies that have a broad product portfolio. There is simply too much data without actionable insights for salespeople to identify sales opportunities and close more deals at the right price to the customer.   
6. Slow reaction to frequent cost changes due to manual processes taking too long to enact a price change that accurately reflects real-time market conditions. Uniform cost pass-through for all products and all customers results in margin loss and a competitive price disadvantage.
7. Inability to offer a personalized self-service experience due to keeping customer-specific pricing in an ERP system that’s disconnected from your eCommerce portal. This means when a customer goes to buy a product online, they only see a generic list price. This is problematic because it essentially makes eCommerce an electronic catalog rather than a proactive selling channel.
8. One-size-fits-all pricing is an ineffective approach that leads to lost sales when the price is too high, and lost profits when the price is too low. Instead, it’s critical to identify optimal pricing for specific contexts, such as customer type, vertical industry, and geography.
9. Over-discounting at the time of negotiation and quoting leads to margin erosion as sales reps quote inconsistent or misaligned prices to customers.  When sales reps aren’t confident in the true market price, they almost always quote a lower price “just to be safe.”
10. High levels of inventory waste because of an overreliance on manual pricing processes and spreadsheets. In an overstock situation in which you want to move specific inventory quickly, spreadsheets create unneeded complexity when trying to identify the right products for a temporary price promotion or discount.

Management of the Entire Pricing Lifecycle is Key

At the root of all these pricing problems is pricing data that is siloed and a lack of control and flexibility to manage pricing and then efficiently deliver that pricing to sellers or customers. For your pricing strategy and projects to be successful, you need to manage the entire lifecycle – not just parts of it. Only then will you be able to deliver the right deal with the right price to the right customer at the right time.

“Companies have become conditioned to accept these symptoms as normal because, after all, most businesses suffer from them year after year even among the best-run companies. While they are common, they’re not normal, and if you take a closer look, you’ll usually discover a broken pricing process lurking in the background,” Zilliant VP of Customer and Industry Relations Barrett Thompson said. “Embracing the entire pricing lifecycle is a powerful way to get back on track.  The time is right for action, as the market is already penalizing companies who fail to get their pricing right.”

What is The Pricing Lifecycle?

The pricing lifecycle is a process that determines how a company gets the right deal, at the right price, to the customer at the right time.  The major steps include:

• Strategize: Establish revenue growth and margin requirements and align those to meet corporate objectives or goals. This shapes your go-forward pricing strategy.
• Manage: Create a source of truth for your pricing strategy and manage the drivers of price, cost, or customer-specific pricing. This includes making price adjustments based on cost changes, regional factors, discounts, business rules, and more.
• Optimize: Determine the best pricing model based on market inputs and your pricing strategy. Then, quickly adapt prices as needed based on market changes with the help of technology.
• Influence: Empower sales to identify opportunities and incentivize purchasing or selling behavior to close deals faster with targeted guidance.
• Deliver: Enable customers, sales, and partners to close the right deal at the right price and through the right channel.
• Analyze: Measure, learn, and improve pricing strategy impact and execution through insights.

These steps are a set of interconnected processes that are constantly changing and adapting. The key to managing a successful pricing lifecycle is ensuring that data and insights from each stage build and feed into the next.

You Can’t Afford to Ignore Your Pricing Lifecycle

If any stage of the pricing lifecycle is broken off into silos and managed in disconnected systems or spreadsheets, then pricing becomes a bottleneck leading to poorly priced deals and revenue loss. Companies can no longer afford to ignore pricing processes. Only through efficient management of the entire pricing lifecycle will companies be able to ensure future-proof pricing and drive profitable growth.

“By centralizing pricing data and aligning it with strategic objectives, companies can gain a holistic view of their pricing landscape and identify opportunities for improvement and innovation,” Accenture Strategy Principal Director Daniel Lindner said. “Ultimately, by investing in efficient pricing processes and embracing a culture of continuous improvement, companies can unlock new revenue streams, improve profitability, and build lasting customer relationships.”