Why Isn’t Pricing More Valued in Companies?

A reader asked, “Why isn’t pricing more valued in companies?” What a fabulous question. Although I haven’t seen the research, my experience leads me to believe there are three reasons, all huge.

First, many companies don’t know the power of pricing. Alternatively, they don’t know that pricing can have a large positive impact on their profitability. They think they are doing a good job already. My opinion: companies without an executive-led pricing initiative are certainly leaving a ton of money on the table.

Second, executives may understand the power of pricing but don’t know how to tackle it. Face it, pricing is hard. Almost every department cares a lot. It’s the topic of internal arguments. Some departments think it’s too high; others think it’s too low. The systems aren’t in place to implement new pricing strategies. Very few executives are pricing experts. Executives will solve problems they know how to solve.

Third, pricing is risky. Why would a company with a profitable business risk it by dramatically changing its pricing? The thing is, pricing doesn’t have to be big dramatic changes. There are many tweaks that can be made to pricing strategy that can add to profitability. However, unless there is a program to find these tweaks, they will go undetected.

The suggestion is to find an executive willing to drive pricing initiatives. Of course, if a company is willing to do that, then they obviously value pricing. First, executives have to care.