Quality in Pricing
It is common among companies, especially in the B2B space, to drop prices in pursuit of increased sales and market share. There is little consideration given to pre-analysis or process. In times of economic slowdown, a top concern in the US currently, sales and marketing teams in companies are even quicker to reduce transactional prices. Companies who constantly manage the quality of their pricing operations should find themselves more profitable and better prepared than their competition to take on a recession, inflation or stagflation.
Obviously, when price actions do not follow the established guidelines or the guidelines are weak to start with the result is eroding sales and profit for the company. Opportunistic buyers spot pricing changes, even small ones, rather quickly and start demanding same or richer across-the-board discounts often pitting competing vendors against each other. This draws companies into the downward profit spiral – price reduction for “select” buyers without proper fences spurs awkward price negotiations with an increasing number of customers. Price variation arising from inconsistent processes such as lack of compliance to guidelines is analogous to a “defect” in the manufacturing process when widgets are produced out of spec. The solution, similar to manufacturing, is well-defined processes and quality control in pricing operations.
Six Sigma Pricing