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Pricing Should Be the Cornerstone of Your Commercial Excellence Initiative

In today's increasingly competitive markets, achieving commercial excellence is essential for any company aiming to drive growth, profitability, and customer satisfaction. While most businesses focus on sales, marketing, and operational efficiencies, pricing often remains overlooked as a key pillar of commercial strategy. Yet, pricing can have a more immediate and profound impact on profitability than any other business lever. Integrating pricing into a company's commercial excellence strategy is not just a good practice - it's a necessity.

What is Commercial Excellence?

Commercial excellence focuses on achieving sustainable growth through better alignment of sales, marketing, and customer engagement processes. It ensures that businesses are not only driving top-line revenue but doing so efficiently while maximizing profitability.

However, commercial excellence strategies often miss a critical element: pricing. Pricing isn’t just a number; it’s a strategic tool that impacts profitability, customer perception, and overall growth.

The Power of Pricing in Commercial Excellence

  1. Direct Impact on Profitability
    Pricing has a greater impact on margins than cost reduction or volume growth. According to studies, a 1% improvement in price can result in a 10-12% increase in operating profits for many companies. By ensuring that pricing strategies are optimized, businesses can significantly boost their bottom line without incremental costs.
  2. Alignment with Value Perception
    Companies often undervalue their offerings due to inconsistent or reactive pricing models. A commercial excellence strategy focused on pricing ensures that businesses align their prices with the actual value delivered to customers. Tools such as value-based pricing help position products and services appropriately, ensuring customers recognize and pay for value.
  3. Driving Competitive Advantage
    In highly competitive markets, strategic pricing can set you apart. Companies that integrate dynamic pricing strategies, such as customer segmentation, competitive benchmarking, and data-driven adjustments, can respond quickly to market changes while protecting profitability.
  4. Supporting Sales Efficiency
    Pricing often creates friction in the sales process when guidelines are unclear or discounts are arbitrarily offered. By incorporating pricing into commercial excellence, companies can provide sales teams with clear, structured pricing guardrails, enabling faster deal closure and better margin discipline.
  5. Enhanced Customer Insights
    Analyzing pricing performance helps identify gaps in customer preferences, willingness to pay, and buying behaviors. When pricing becomes part of your strategy, it fuels data-driven decisions that optimize product-market fit and inform go-to-market strategies.

Why Pricing is Often Neglected

Despite its importance, pricing is frequently undervalued and overlooked. This is often due to several misconceptions:

  • Short-term Focus: Many companies prioritize volume growth over pricing discipline, assuming that lower prices will drive higher sales. While discounts may provide temporary boosts, they can erode margins and harm long-term profitability.
  • Lack of Pricing Ownership: Pricing often falls into a gray area between sales, finance, and marketing, with no clear ownership. Without dedicated resources and expertise, pricing decisions can become ad hoc and reactive.
  • Complexity: Effective pricing requires data, analytics, and a deep understanding of customer behavior, market dynamics, and competitive landscapes. Many companies lack the tools or frameworks to navigate this complexity.

Integrating Pricing into Your Commercial Excellence Strategy

To elevate pricing as a core component of commercial excellence, businesses must adopt a systematic approach:

  1. Leverage Data and Analytics
    Modern pricing strategies rely on data-driven insights. Companies must invest in tools and technologies that enable them to analyze customer willingness to pay, performance trends, and market dynamics. Advanced analytics can help identify pricing opportunities, optimize discount structures, and improve overall price realization.
  2. Define Clear Pricing Governance
    Pricing should not be left to chance. Companies need to establish clear ownership and governance structures for pricing decisions. This includes defining roles, responsibilities, and approval processes to ensure discipline and consistency.
  3. Adopt Value-Based Pricing
    Value-based pricing focuses on the perceived value of a product or service to customers rather than cost or competitor benchmarks. By understanding what drives customer value, companies can set prices that reflect the benefits they deliver while capturing a fair share of that value.
  4. Equip Sales Teams for Pricing Execution
    Sales teams are often the frontline of pricing execution. However, they may lack the tools, training, and confidence to defend prices during negotiations. Companies should provide sales teams with clear pricing guidelines, value-selling techniques, and negotiation support to drive price discipline.
  5. Monitor and Adjust Continuously
    Pricing is not a one-time decision, it's an ongoing process. Companies must continuously monitor pricing performance, customer feedback, and competitive dynamics to make timely adjustments and stay ahead.

The Business Impact of Pricing Excellence

Companies that integrate pricing into their commercial excellence strategy achieve measurable improvements in performance:

  • Higher Profitability: Optimized pricing delivers immediate margin improvements without requiring additional sales.
  • Enhanced Customer Loyalty: Transparent and value-driven pricing fosters trust and strengthens customer relationships.
  • Increased Sales Efficiency: Setting the right pricing guardrails for every customer and deal speeds up sales cycles, cutting out admin time, ad hoc analysis, and internal pricing debates.
  • Greater Competitive Advantage: Thoughtful pricing strategies enable businesses to differentiate their offerings and outmaneuver competitors.
  • Improved Decision-Making: Data-driven pricing decisions reduce guesswork and enable companies to respond proactively to market changes.

Conclusion

Pricing must be a key pillar of any commercial excellence initiative. When executed strategically, pricing has the power to transform profitability, enhance customer value, and strengthen competitive positioning. Companies that treat pricing as an integral part of their commercial strategy gain a distinct edge in today's dynamic markets. By investing in pricing capabilities, businesses unlock untapped value and set themselves on a path to sustained growth and success. 

 

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