Implementing strategic change

This chapter examines the impact of pricing on company profitability and set out a framework for considering pricing more broadly within the organisation. It covers how to formulate a pricing strategy, alternative approaches to setting prices, how to implement prices in both B2C and B2B markets and discusses the infrastructure that a firm needs to be best-in-class in pricing and consider the legal framework within which pricing must operate. The principal problem with cost-based pricing is that, as an approach, it is inherently inward looking, considering only a company's costs and its own ambitions for profit. Many companies have a discount escalation structure whereby to offer bigger discounts, higher authority sign-off is required. Such controls certainly prevent major pricing mistakes, but do little to drive the best possible pricing outcomes. Pricing in B2B organisations is therefore as much about the management of internal behaviour as it is about understanding customer willingness to pay.