Profit & Pricing Management : CSO the Challenge
In B2B management, pricing is not the biggest growth driver, but it is the most effective value driver. For B2B companies with common financial characteristics, the effect of price changes on return on sales and return on equity can be twice as high as the effect of quantities sold changes or COGS changes and five times as high as the effect of fixed cost changes.
In B2B companies in the context of profit & pricing, cost-based pricing (overhead calculation, etc.) is still predominant today, market pricing is rare and price optimization is the exception. The consequences are often too low returns and unused profit potentials. Weakly executed price discount policies, ‚one size fits all‘ pricing practices etc. destroy millions of Euros of contribution margin. Although price is an effective profit driver and many high-performance pricing techniques are known, they are still (too) little used in B2B sales.
Determining ‚right‘ prices is an analytical challenge, achieving them is an execution challenge. Ultimately, determining and realizing ‚right prices‘ is the result of the performance of a professional pricing management system.