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Pricing initiatives to improve profitability should be implemented strategically at the C-suite level and not by your sales or financial departments, according to Steve Deist in 4 Strategies for Smarter Distributor Pricing.
"If pricing responsibility falls to the financial side of the company, policies may be too strict or aggressive, leading to poor adoption with excessive overrides or exceptions," Deist says. "Because they don’t have daily customer interaction, internal accounting staff may be naïve about the level of competitive intensity or risk of customer alienation. On the other hand, giving the responsibility to the sales organization may lead to the opposite extreme: a timid implementation with loose rules that fade over time."
Introducing pricing as a process can help to ease the transition, however, and this should be done at the executive level. The C-suite can approach the opportunity systematically by investing resources to continuously monitor and improve pricing realization, and deploying systematic feedback loops to objectively measure the impact of changes can all help to alleviate tensions.
"If your sales team sees that you’ve done your homework and that the intention is for pricing to be consistent and fair, it will be far more receptive," Deist says.
Read more information on smart pricing practices in 4 Strategies for Smarter Distributor Pricing.