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Revenue Growth Secret Weapon: Effective Price Management

discountsCEOs/CFOs are constantly challenged to increase top line revenue and improve bottom line profitability for their companies. Projects are continually launched with a focus on reducing cost of goods, improving supply chain efficiencies, reducing SG&A, improving cash flow etc.

However, we rarely hear about initiatives to improve price realization of a company’s current product or service offerings.

Effective price management is about reducing price leakage and increasing the actual purchase price through effective price realization.  There are several areas of opportunity to consider for more effective price management:

  • Provide enhanced selling and negotiating skills training for direct and indirect sales organizations with less focus on price concessions and more on the value proposition of the product or service.
  • Evaluate promotional discount levels by customer, channel etc.   Over time when an organization is empowered to use promotional discounts to close a sale the level of discount will rise to the maximum allowed. Consider reducing the promotional discount level allowed by  2-5%.
  • Analyze features and services continuously versus competition. Listen to your customers and understand what is important and of value to them. There might be features and services offered that they are willing to pay more for or some they don’t want that could be taken out to reduce cost.

Our advice: Thoroughly analyze your pricing strategies across your entire customer base. Develop a segmentation analysis by channel and by customer to establish a clear picture of the opportunities to begin improving price realization. A 1% improvement in realized selling price can quickly improve the bottom line profitability.   That’s a gain that will help you Stay #TopRight.


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