Gold Magazine January - February 2014, Issue 34 | Page 73

pricing pricing pricing
pricing pricing pricing
pricing pricing pricing
pricing pricing pricing
pricing pricing pricing
pricing pricing pricing
pricing pricing pricing
pricing pricing pricing
pricing pricing pricing
pricing pricing pricing
pricing pricing pricing
pricing pricing pricing

pricing

Under
Pressure
S

{business}

Companies need
to be more
sophisticated
when it comes
to pricing

haky consumer confidence, stiff competition
and increased transparency
offered by the Internet are
forcing organisations to
reappraise how they price
their goods and services,
says a new report from PwC, “The power of
pricing”.
The survey of over 500 companies worldwide highlights some significant and also
surprising trends in how companies set prices.
More than 40% of respondents consider
pricing to be the most effective way of growing profitability. However, only 26% believe
increased prices will drive profits over the
next three years while a significant minority
(17%) believe that profits will decline along
with their prices.
David Lancefield, Partner, PwC, says:
“Pricing is one of the main levers you can
pull to make an impact on your bottom line.
It’s especially important to get it right in a
world in which investors and customers are
more demanding than ever. Yet only 5% of
respondents feature in the top quartile of all
aspects of pricing performance.”
The results also show that as many as 60%
of respondents adopt the most basic approaches to setting prices including matching
competitors’ prices or applying a fixed mark
up to costs. More sophisticated approaches
such as pricing based on customer willingness
to pay are less common.
Nazanin Naini, Senior Consultant, PwC,
says: “The greatest challenge for companies is
to understand where they generate real value
and to reflect this in their pricing. Many

The infrastructure
to support smart pricing
decisions is not fit for
purpose

companies claim to be customer-centric, yet
understanding what customers really value is
one of the most commonly stated challenges,
with only 13% of our survey respondents
telling us they have deep insight into their
customers’ willingness to pay.
“Furthermore, we often see companies taking a scatter gun or uniform approach rather
than, for example, setting prices in a way that
rewards loyalty and customers generating
high profitability, as opposed to those most
costly to the business.”
Companies often underestimate the
importance of having the necessary people
and systems to support an effective pricing
strategy. Nearly half of the survey respondents don’t have a pricing team to make fully
considered recommendations on pricing. As
a result businesses often give their sales force
discretion to discount from list prices, making profit targets less achievable.
David Lancefield said: “Our research suggests that the infrastructure to support smart
pricing decisions is not fit for purpose. Almost half the respondents struggle to develop
an IT infrastructure that supports pricing,
whilst 37% struggle with governance and
decision-making.
“A poor pricing strategy can result in a loss
of customers and a backlash from important
stakeholders. When it’s done well, it’s the
most powerful and effective way to achieve
profitable growth.”

Lean In: Women, Work,
and the Will to Lead

I

By Sheryl Sandberg (WH Allen, 2013)
R.R.P. £16.99 (£11.55 from amazon.com.uk)
n this, the 5th best-selling title
of 2013 on Amazon, the Facebook COO and one of Fortune
magazine’s Most Powerful
Women in Business draws on her
experience of working in some of the
world’s most successful businesses and
looks at what women can do to help
themselves, and make small changes
in their lives that can effect change on
a more universal scale. Learning to
‘lean in’ is about tackling the anxieties
and preconceptions that stop women
reaching the top, taking a place at the
table and making themselves a part
of the debate. Sandberg makes some
interesting points about how men and
women are judged differently (by people
of both sexes) and how women should
work with it rather than fight it. The book
encourages women to climb corporate
ladders, Sandberg’s point being that the
more women there are at high levels, the
more that all women in the workforce
will benefit. She must surely be aware
that, in 2014, only eighteen of the Fortune 500 CEOs are women.

the international investment, finance & professional services magazine of cyprus

Gold 73