How Manufacturers Can Avoid Three Common Pricing Pitfalls
Pricing projects are complex and can require some organizational agility to achieve the results desired. Unfortunately, many of these projects fail to deliver the expected results, and the reasons for these failures are varied (see results from a quick survey on pricing).
Pricing projects are not just about numbers and formulas; they involve people and their attitudes towards change. The support people receive and how informed they are of the changes coming their way have a great impact on the project’s success. So, lets examine some tips for avoiding common pricing pitfalls with a bit of change management techniques.
Practice Good Data Hygiene
Inaccurate or incomplete data can lead to pricing decisions that are not optimal, resulting in lost profits or missed opportunities. Gaps in the data or unreliable reporting can cause pricing strategies to fail. Manufacturers must have reliable data to support their pricing decisions, including data on costs, customer behavior, and market trends. By investing in data hygiene best practices and technology that handle disparate data streams, manufacturers can avoid this pricing pitfall and make more informed pricing decisions that drive profitability.
Watch for the Untrusted Black Box
In some cases, using a pricing models are seen as a "black box" that cannot be fully understood, leading to skepticism among stakeholders about if the right pricing is being generated. This mystery element of how the calculations are made can cause users of the output to not trust every output, leading to poor adoption. For an even deeper look on garnering trust and motivating sales teams read How to Convince Sales Teams to Love Pricing written by an actual sales leader, Joy Thorn, VP of Sales for Revenue Analytics.
In the Dark
Projects die in the dark. No matter who’s in charge. No one can embrace a new process if they are unaware. An email notice might not be enough to get stakeholders to understand how their procedures might need to change. So getting leadership support and developing a great communications plans is essential to the success of any pricing project. Leaders must communicate and ensure that those involved understand the need for change. Additionally, continuous communication is necessary throughout the project, providing stakeholders with regular updates on progress and changes.
Pricing projects are complex, and they require careful planning and execution to avoid common pitfalls. If you want to learn more about how to make pricing projects successful or how dynamic pricing can help, schedule a call with us today.
Want more information on best practices in pricing strategy? Watch this short video to learn how a nationally recognized manufacturer and distributor of building products overcame a 400% variance in their pricing.