Mysterious Pricing and Profitability Management Find Answers in Deloitte’s Book

Michelle Remo, “Big 4″ observer
July 13, 2011 /

Global consulting and accounting firm Deloitte has released a new book that will help organizations to better understand and implement effective pricing management as only few of them know how to do pricing well.

Pricing and Profitability Management: A Practical Guide for Business Leaders is written by Deloitte practitioners and authors Julie Meehan, Mike Simonetto, Larry Montan and Chris Goodin who integrated their decades of experience in pricing and profitability management to support their perspectives on results of pricing decision-making and the need for an integrated approach.

“Despite improvement in recent years most companies still aren’t capable of managing price effectively and are leaving real money on the table,” said Mike Simonetto, principal, Deloitte Consulting LLP and global pricing and profitability management practice leader.

“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 negatively in their bottom lines,” Simonetto added.

“We give readers 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, information technology, human resources, legal and other teams have in managing price execution and margin erosion in a sustainable, company-wide approach to pricing,” said Meehan, a leader in Deloitte’s pricing and profitability management practice.

The book outlines six core competencies of a holistic, integrated approach to pricing, which includes Price Execution (processes and policies in delivering prices to the marketplace), Pricing Strategy (guide in establishing prices), Advanced Analytics and Price Setting (viewing business at the transaction level, set prices and manage margin erosion).

This approach uses data and specific analysis to reveal customer, channel and product profitability patterns across millions of transaction records.

The outline also includes Organizational Alignment and Governance (people and cultural factors that shape pricing behavior including organizational structure, sales effectiveness, training and talent management), Pricing Technology (software applications ideal for repeatable price analytics and execution), and 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).

 

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