Commitment to Profitable Growth

A commitment to the work of value and pricing is a commitment to profitable growth.  Here is an illustration of the five primary ways that this commitment translates into better performance.  
            
Deeper Connection with Customers

The foremost benefit of improving pricing practice is creating a deeper connection with customers.  Reflect on your own experiences in purchasing products or services.  When price is managed well, it fades into the background.  Then the business conversation remains where it should, on value – the benefit to the customer.  Price may be discussed, and even negotiated, but if managed well it stays out of the way.

Truth is that price is an extraordinarily powerful communication with your customers.   In an instant your price communicates what you believe the value of your offering is, and how that offering stacks up against those of competitors.  Getting price right is a key to capturing the right clients, selling them the right services, being paid fairly, securing good quality references and obtaining future assignments.

Breakthrough Offerings and Strategies

Deeper connections with customers sets the stage for developing stronger offerings and market strategies, the second key benefit of better pricing.   Focusing on the offering attributes that customers are willing to pay for, and targeting customers that get the biggest bang for their buck makes for a “wicked good” combination.  When the value and price are right, launch strategies proceed more smoothly and the likelihood of price competition is reduced. 

Enhance Sales Effectiveness

With a deeper connection with customers, and stronger offerings and strategies, the stage is set for the third way that pricing improves business performance: enhanced sales effectiveness.  A popular misconception is that pricing and sales are inherently at odds.  In fact, the opposite is true.  While it is true that there is always downward pressure on prices, sound pricing policies and processes provide sales with better tools for dealing with the pressure.  Better pricing increases negotiating power, shortens the sales cycle and rewards sales for capturing more profitable revenues.

Risk Reduction and Management

Ultimately  a focus on value and pricing permits business leaders to reduce and better manage risk.  Pricing risk manifests at both the strategic and tactical levels. 

This chart illustrates unmanaged tactical pricing risk in a professional services practice.   The range of discounting is 0 to 45%, and there is no correlation with deal size.  From your customer’s standpoint this kind of pricing variance simply represents a lack of integrity.  Internally, it means lost margins.
           
New and More Profitable Revenues

Stronger offerings and strategies, enhanced sales effectiveness and reduced risk all translate into new and more profitable revenue opportunities.  These opportunities are new because they usually go unnoticed unless someone is specifically looking for them, and they are more profitable because revenues due to improved price performance often have little cost associated with them.

To arrange a confidential conversation about the pricing challenges and opportunities in your business, please contact tim@valueandpricing.com

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