When seeking different perspectives on commercial challenges, it’s hard to find a better setup than something like a Professional Pricing Society conference. The event pulls 300+ leaders into the same place and provides countless keynotes and workshops on varying topics within pricing and commercial growth. It’s a thought-fest.
So how do you solve a puzzle like pricing? At the executive team level, it can be a highly emotional topic. When you get into the weeds, it can be complex and frustrating. Venture over to sales execution and navigating these waters can be somewhat of an extreme sport.
Last month, across different industries, markets, functions, and levels, I heard three overarching themes and opportunities for pricing to lead the charge in new ways.
1. What’s looming, uncertain, and read all over?
Recession predictions seem to change by the day. I was working through another blog this morning and couldn’t tell if it was a worthwhile concept or better as a proposed Saturday Night Live skit. The change is constant, and we’re all doing our best to plan for any scenario.
Ron Coughlin, CEO of Petco recently said: “I’ve never developed plans with such a span of differentiation. The pet category could be up 8-10% next year… But at the same time, there is a catastrophic view that there is zero growth. I’ve never had as broad of an array of outcomes.”
Our take: As volatility continues, profitability is king. It’s no longer revenue. Review your offerings through the lens of cost and demand and make sure your efforts are tailored to that specific mix. At a time when the narrative on inflation and recession is changing by the day, we need flexibility, and a one-size-fits-all approach across products will drag your profitability down.
2. Say “value” five times fast
Value-based pricing has been around for a long time. In concept, the idea of getting paid for the value you deliver is a check-check across the board. Nobody disagrees there. However, the implementation of truly understanding and communicating value continues to be a struggle for many companies. It can be easier said than done. Leaders are working to educate internal and client teams efficiently, and simplicity seems to be key.
Our take: Focus on fair pricing. At a time when increases are rampant, and inflation prompts an eyeroll from most of the population, I’d argue that pricing can often be perceived as the bad guy. You hate to see it. Broad-stroke price changes will rightfully be perceived as unfair. As this inflationary environment continues, it’s important to understand cost changes for specific customer and product segments. Pricing leaders can significantly impact enterprise profitability with well-strategized fences between products and services. The stronger the fences, the better the negotiation outcome.
3. Pricing and sales alignment is an extreme sport
There’s no “set price” without “get price.” And we know the pressure that sales teams are under. Finding ways to support the sales team is even more critical as sellers navigate cost cutting and budget scrutiny in the tail end of the year (when we know the procurement buzz saw is at play).
Our take: Make sure your sales team is armed with ways to call the bluff of buyers who are playing poker with them. When a price increase is being demanded, do you have a flanking product to offer at a lower cost? Tiered offerings can dramatically impact the outcome of sales negotiations, and the stronger your fences are between products, the better your sales team will be able to defend value and grow the company’s margins.
All in all, bringing 300 leaders together will allow for different approaches, different solutions, and different definitions of “the problem” altogether. The PPS community remains a steadfast resource as we all navigate and drive growth through a predictably volatile future.