The Tension: Why Opinions on Pricing Rarely Align
Because pricing touches so many areas of the business, it’s no surprise that opinions about pricing decisions often diverge. Here’s why alignment is so difficult:
- Different Priorities: Each team has its own goals. For example, sales may push for discounts to close deals quickly, while finance resists those discounts to protect margins.
- Fragmented Data: Teams rely on different data points to form their opinions. Marketing may cite competitor pricing, while finance refers to cost structures, and product teams highlight feature value.
- Emotional Stakes: Pricing can evoke strong emotional responses because it feels personal. It represents the value of your work and your product, and disagreements can quickly escalate.
This dynamic makes pricing not only a business decision but a litmus test of your company’s ability to collaborate effectively across departments.
Where Many Companies Struggle: The Trap of “Lazy Pricing”
In the face of complexity, many companies fall into the trap of “lazy pricing.” This approach is often characterized by:
- Defaulting to the easiest option: Following competitors’ pricing or applying a flat percentage increase without deeper analysis.
- Deferring the decision: Choosing something “low lift” with the promise of revisiting it later.
- Relying on short-term fixes: Resorting to discounting or promotions to patch up sales gaps.
The problem with lazy pricing is that “later” rarely happens. Like skipping the gym with the intention of starting next week, revisiting pricing often gets deprioritized. The result is a patchwork of decisions that undermine long-term growth.
When pricing isn’t given the strategic focus it deserves, it leads to:
- Missed revenue opportunities: Pricing too low leaves money on the table, while pricing too high can deter potential customers.
- Erosion of customer trust: Inconsistent or unclear pricing signals a lack of confidence in your value proposition.
Internal frustration: Teams feel misaligned, leading to friction and inefficiency.
The Fitness Analogy: Why Pricing Needs Discipline
Think of pricing like fitness. To achieve meaningful results, you need a consistent routine, clear goals, and a commitment to long-term progress. Skipping workouts and relying on crash diets might seem convenient, but they rarely deliver sustainable results.
Similarly, sustainable pricing requires:
- Clarity of strategy: Know what you want to achieve and how pricing supports those goals.
- Discipline in execution: Stay committed to your pricing framework and avoid knee-jerk reactions.
- Cross-functional alignment: Ensure every team understands and supports the strategy.
When pricing is treated as a discipline, it becomes a lever for growth and a signal of organizational strength.
How to Build a Strong Pricing Organization
So how do you move beyond lazy pricing and create a robust, strategic pricing process? Here are some best practices:
1. Align Around a Clear Pricing Strategy
Start by defining your pricing strategy. Is your goal to maximize revenue, penetrate the market, or signal premium value? Your strategy should align with your broader business goals and provide a clear framework for decision-making.
2. Establish Cross-Functional Ownership
Pricing shouldn’t live in a silo. Create a cross-functional pricing committee with representatives from key teams. This group should own the process, ensure alignment, and resolve conflicts when they arise.
3. Use Data to Drive Decisions
Pricing is part art, part science. Invest in tools and analytics to gather data on customer behavior, willingness to pay, competitive benchmarks, and cost structures. Use this data to inform decisions and minimize subjective bias.
4. Communicate Pricing Decisions Clearly
Once decisions are made, communicate them effectively to all teams. Transparency is key to building trust and ensuring consistent execution across the organization.
5. Iterate, but Don’t Procrastinate
Pricing is not a “set it and forget it” activity, but neither should it be an endless cycle of changes. Build in regular review cycles to revisit and refine your pricing strategy based on market dynamics and performance data.
Ask Yourself: How Does Your Company Measure Up?
Pricing is not just about numbers; it’s a reflection of your organization’s ability to collaborate, align, and execute. So, here’s the question: How would you rate your company’s pricing process?
- Is it structured and strategic, or reactive and fragmented?
- Do teams feel empowered and aligned, or are they stuck in debates and misalignment?
- Are you proactively driving long-term results, or relying on short-term fixes?
If pricing feels like an ongoing struggle, you’re not alone. Many companies wrestle with these challenges. But the good news is that pricing is a skill you can develop—through clarity, discipline, and cross-functional collaboration.
Conclusion: Pricing as a Lever for Growth
Done well, pricing is not just a business decision; it’s a competitive advantage. It signals your value to customers, aligns your teams around shared goals, and drives sustainable growth.
But pricing success doesn’t happen by accident. It requires intentionality, collaboration, and a commitment to treating pricing as a strategic discipline.
So, what’s your next step? Evaluate your pricing process, engage your teams, and start building a foundation for long-term success.
I’d love to hear your experiences. How has your team approached pricing? What challenges have you faced, and what solutions have worked?
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