More Attention to Price Management

Only a few companies are aware of the true impact of a proper strategy and price management on the profitability of the organization.

Friday, October 19, 2018

Ariel Baños, pricing specialist and founder of, explains why it is critical for organizations to control the variable with the most impact on their results, and details the five reasons for implementing a pricing area in companies:

1. Pricing requires focus: Price management requires specific knowledge and full-time dedication to effectively identify opportunities to capture higher profitability. In addition, a pricing area helps raise awareness throughout the organization.

2. An integral vision is needed: Pricing is an area that has a global vision of the price management process and its key variables (costs, competitors, customers and sales channel). This makes it possible to detect opportunities that are not visible when traditional, partial approaches are applied. Pricing organizes and coordinates the contributions of the different areas of the company in relation to prices.

3. Clear rules must be defined to apply discounts: Pricing is responsible for implementing procedures to intelligently automate pricing decisions. Objective criteria are established to provide discounts.

4. It is necessary to manage the real exceptions: Pricing establishes intelligent limits to the price exceptions requested by commercial areas and channels the approval of the true exceptions to higher levels of the company.

5. The value created for each client must be measured: Pricing has tools to quantify the value created for each client, and align the prices charged to this value. This allows the prices to be micro-segmented and "Pricing 1 to 1."

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Prices: Main Factor in Profitability

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Controlling and professionally establishing the price of what is sold is essential for a company in order to be successful and obtain an adequate return.

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