Corporate Pricing Process & Discipline

Corporate pricing process leads to pricing discipline, and pricing discipline leads to margin improvement. I’ve seen this at work in small privately held companies and some of the biggest pharmaceutical companies in the world. But to work the pricing process has to match the corporate culture, the specific individuals involved, and the short and medium term financial metrics sought. While key elements are intrinsic each corporate pricing process needs to be custom built for purpose.

And there are serious implications to being a disciplined pricer. Marn and Rosiello reported an 11% lift in corporate profits, across a wide range of industries, tied to a 1% increase in prices. In a more recent study, Hinterhuber and Liozu (friend of Chiral Logic) found that only 5% of Fortune 500 companies had full time pricing functions despite the fact that small changes in pricing can have 20%-50% swings in product profitability. It’s not that senior corporate leaders are unaware of the value of pricing. The problem is that pricing discipline is hard work. It’s like being thin and fit. We all know what we need to do to become fit; however it’s the discipline and time required that trips us up. The good news about corporate pricing is that it doesn’t have to be this hard. Many of the benefits of price are likely just below the surface of your current daily practices. Further the clarity that clear pricing frameworks provide your organization enable focus to be placed on other more profitable activities like selling and new product development.

Areas of interest/expertise include:

  • Corporate pricing approval process development and implementation (Pricing Governance)
  • Annual or semi-annual approved price corridors so that junior level staff are empowered to ‘make deals’ and senior management has visibility
  • SOX compliance and corporate board presentations
  • Instilling pricing discipline at all levels of the organization – determining what works and how to implement it
  • Creating long-term profitable and compliant sale practices that benefit sales teams, corporate leaders, and shareholders
  • Pricing, value, and negotiation improvement through coaching and training
  • Sales and Sales Management review based on profitability and tied to tool allocation, utilization, customer/patient access, managed care coverage and other metrics
  • Providing transaction-level analysis and pricing based profit recommendations at the product level (big co.) or portfolio level (medium/smaller co.)
  • Providing operational advices, monitoring, and improvements for HOW to make price changes and how to plan for buyer and competitor reactions

For more information: Corporate Pricing Process & Discipline sell sheet 10022017