Pricing and Profitability Management: A Practical Guide for Business Leaders

Is the Price Right or Wrong? New Book from Deloitte Demystifies Complexity of Pricing and Profitability Management

Pricing products and services can significantly impact a company’s profitability, yet few organizations truly know how to do it well.  In the new book, “Pricing and Profitability Management: A Practical Guide for Business Leaders,” Deloitte practitioners Julie Meehan, Mike Simonetto, Larry Montan and Chris Goodin offer executable advice on effective pricing management.

The authors’ collective decades of experience in pricing and profitability management taught them that theory can be hard to implement and that pricing decisions are often made through disjointed, fragmented efforts within an organization.  Pricing and Profitability Management is written for business leaders, pricing professionals and others who want to sharpen their capabilities and deepen their understanding of this key strategic discipline.

"Although we’ve seen improvement in recent years, most companies still aren’t capable of managing price effectively--they’re leaving real money on the table," said Mike Simonetto, principal, Deloitte Consulting LLP and global pricing and profitability management practice leader. "But many companies are awakening to the power of pricing and are starting to make the investment to improve their capabilities.  Pricing competency is quickly becoming table stakes, as organizations without a roadmap for improvement will likely see it reflected in their bottom lines."

Julie Meehan, a leader in Deloitte Consulting LLP’s pricing and profitability management practice and book co-author, added, "Our book aims to give the reader insight into how companies can transform their pricing capabilities to dramatically improve their businesses. While many executives focus on price setting with marketing and sales teams, they sometimes neglect the role that finance, IT, HR, Legal and other teams have in managing price execution and margin erosion in a sustainable, company-wide approach to pricing."

The book outlines six core competencies of a holistic, integrated approach to pricing. They are:

1. Price Execution: The processes and policies a company uses to deliver its prices to the marketplace.
2. Pricing Strategy: The guiding principles behind a company’s efforts to price its goods and services.
3. Advanced Analytics and Price Setting: The use of data and specific analyses to view the business at the transaction level, set prices, and manage margin erosion.  This can reveal customer, channel and product profitability patterns across millions of transaction records.
4. Organizational Alignment and Governance: The people and cultural factors that shape pricing behavior—including organizational structure, sales effectiveness, training and talent management.
5. Pricing Technology: The software applications that can help companies sustain effective pricing by providing the technical environment required for repeatable price analytics and execution.
6. Tax and Regulatory Management: A company’s ability to proactively manage the tax and regulatory issues related to pricing decisions to ultimately retain the benefits from pricing improvements.