New Year's Resolutions for Pricing

Many of us make New Year’s resolutions with great intentions, but perhaps miss carrying out some of them. Even if you made great progress this year, we hope you will join us in making and sticking to these resolutions.  This is our fifth annual publishing of New Year's Resolutions for Pricing

Photo by chuttersnap on Unsplash

 

I resolve to:

  1. Set prices according to the value we bring to customers, not according to my costs.
  2. Use the rich data I have in my transactions and CRM interactions to better understand my customers’ needs, how they react to prices and offers, how their prices compare to similar customers and situations, the reasons we win and lose business, and our optimal price structure.
  3. Segment my customers into groups that have common needs, purchasing power, and price sensitivity
  4. Identify the drivers of customer value and price sensitivity for each segment accordingly
  5. Stratify my products according to their characteristic and attributes that indicate price sensitivity and competitive intensity
  6. Establish target prices which reflect segment and customer value as well as the characteristics and attributes of each product
  7. Develop an exception management process to respond to requests for prices outside the boundaries we have established
  8. Monitor, evaluate, and report on the effectiveness of our pricing strategies and specific price actions
  9. Align incentives so that people are rewarded for actions that support our pricing strategies and guidelines and do not reward actions that support undisciplined pricing
  10. Continuously improve

You do not have to be perfect in all these areas. If you continue to make progress toward these resolutions, I am confident you will experience improving effectiveness of your pricing and increased profitability.

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