Pricing Operations

Quality in Pricing

1024 768 Sodhi Pricing Associates

It is common among B2B companies to pursue sales and market share by dropping price. Typically there is little consideration given to pre-analysis or process. In times of economic slowdown, a top concern in the US currently, sales and marketing teams in companies are even quicker to reduce transactional prices. Companies who constantly manage the quality of their pricing operations should find themselves more profitable and better prepared than their competition to take on a recession, inflation or stagflation. Obviously, when price actions do not follow the established guidelines or the guidelines are weak to start with the result is eroding sales and profit for the company. Opportunistic buyers spot pricing changes, even small ones, rather quickly and start demanding same or richer across-the-board discounts often pitting competing vendors against each other. This draws companies into the downward profit spiral – price reduction for “select” buyers without proper fences spurs awkward price negotiations with an increasing number of customers. Price variation arising from inconsistent processes such as lack of compliance to guidelines is analogous to a “defect” in the manufacturing process when widgets are produced out of spec. The solution, similar to manufacturing, is well-defined processes and quality control in pricing operations.

https://sodhipricing.com/2007/12/quality-in-pricing/

Message about Six Sigma Pricing

1024 768 Sodhi Pricing Associates

Pricing is the #1 worry for business leaders but companies can have far more control over pricing than they may realize. Many companies have developed solid sales strategies—but without equally good pricing operations, those strategies by themselves will not add anything to the bottom line. The goal of pricing operations is to consistently control price deviations in transactions and contracts over time and across customer segments. We discuss a breakthrough approach to the pricing discipline in our book, Six Sigma Pricing: Improve Pricing Operations to Increase Profits (FT Press), one that can systematically eliminate pricing-related leaks driving new profits straight to the bottom line without alienating customers. Six Sigma Pricing is not simply an application of Six Sigma to pricing operations but rather a way to overcome inter-function issues that make improving pricing processes so challenging. The book follows the Six Sigma framework with examples of each DMAIC (define-measure-analyze-improve-control) step from a real company doing a major pricing project: * How to identify pricing “defects” * How to gather and analyze relevant pricing data and pricing-agreement processes * How to identify and preempt failures of control; implement modifications that don’t create onerous approval processes * How to sustain and extend pricing improvements into the future.

https://sodhipricing.com/2007/12/message-about-six-sigma-pricing/