In numerous projects over the course of my career, I have seen many examples of adequate and focused pricing. In terms of turnover, and even more so of profit, the right pricing can be a true game changer, as this has the most targeted and effective impact on a company’s growth and profitability.

The price and its leverage effect are not a mystery.
Time and again, the price has been confirmed to be the key cornerstone for success.

However, the button that powers the right price push is not a static one. Pricing means being dynamic in one’s activities, in one’s organisation and when interacting with customers on the market – simply because these external circumstances are also continuously changing. Pricing means growth across the board – as a company and as a person. In order to ensure this change, we often need to leave old paths and burn existing bridges. By understanding pricing correctly and recognising the breadth of its influence, we can understand the consequences this may have for the organisation and recognise its stimulus for our products, services, distribution and marketing.

Almost every pricing project sets the same objectives and presents an opportunity to shape the company in a more profitable manner, to generate higher turnover and sustainably expand the customer base.

Who wouldn't want a better future than just a perpetuated present?

However, internal impatience, overestimation of one’s abilities and exaggerated expectations are often companions on this journey. At the same time, we often encounter internal fears of failure and of the inevitable operative change looming on the horizon.

The change process in pricing and the associated pricing projects are not a sprint and can also not be compared to a quick change in lunch plans. Due to its scale, and the heterogeneous context into which prices are embedded, it takes a great deal of tact, preparation, communication and, above all, proper planning across the board.

Unplanned trips may be quite enticing – however, they can also result in dissatisfaction and losses. Over the course of our pricing journey, the required degree of digitisation, for example, may be one unforeseen criterion that could definitely turn into an obstacle. Not being able to meet all criteria from the get go is not an issue – failing to recognise and work on these criteria, on the other hand, would be.

In other words: risk is a preventable factor in pricing. Companies do not necessarily need to take this risk – provided they understand pricing as a journey, planning an unambiguous route and communicating deviations from course clearly and openly.

In my early pricing days, I would never have imagined that I would meet so many people from such diverse backgrounds over the course of my pricing career. People from different departments, with different expertise and, to some extent, with very different approaches and experiences. My path has been lined with long and controversial discussions as well as with delight, approval and agreements between the stakeholders. Long meetings with lively conversations that ultimately focused on much more than just the price.

Always challenging – never deterring.

Pricing and change are not an issue or a challenge for a single department. If we believe that they are, we soon risk falling victim to internal battles. Within a company, changes in pricing are akin to open-heart surgery: the heart may be the organism’s central supplier, however, it cannot work without the brain or the liver. Therefore, every organ – every department – needs to be involved in order to achieve the objectives. And especially when it comes to new impetus, every element needs to be supplied with the necessary information. This is not a one-way street; it is a constant flow of communication, of processing, of weighing options and making decisions.

As Simon Sinek said "Together is better",
or also: "The losses caused by a single wrong pricing decision is often greater than the effort to have decided the price together. "
(Marzena Schämaschko-Meyer, 2021)

The concept is basically really simple.
Purchase price + target margin = selling price.

Isn’t it?

Simply put, the price is a statement on a product’s value; in even simpler terms, many people view the price as a series of numbers or as the amount by which the money in their bank accounts is reduced when they purchase the good.

But it is not really that simple at all. The price is a generalist – a true jack-of-all-trades. Our interest in the price declines and grows depending on personal and situational influencing factors and/or product specifications. The price helps us navigate the purchasing process, serving as an indicator of quality, for example. Sometimes, the price even makes us feel as if we’ve made a good deal, simply by changing the context. Hardly a day goes by when we don’t encounter a price – but there are many days on which we make a decision based specifically on the price: namely, to buy or not to buy.

From an entrepreneurial perspective, the price is a key success driver for turnover and profitability. However, merely viewing the price as the result of a good calculation does not do it justice, as the price is the link between our customers, our competitors and our own offer. Once we understand the complexity and diverse dimensioning of the price, we can sustainably expand its true potential and lead our company on a growth and success path in the long term.