Chapter 7
Pricing Technology and Data Management
Not all problems have a technological answer; but when they do, that is the more lasting solution.
—Andrew Grove, Senior Advisor, former Chairman and CEO, Intel Corporation
A large manufacturer and distributor of consumer products had invested considerable resources to create and maintain its pricing spreadsheets over the years. Various complex processes supported the flow of data into and out of the tables. But the firm had encountered two big problems with its existing tools. First, management didn't know whether optimal prices were being set. Each time it moved to adjust prices, the process took months to complete and was performed mostly through intuition and guess work. No one was sure if the firm was leaving money on the table or driving customers to competitors.
Second, the leadership team had a limited understanding of how the sales team was negotiating with customers. Once price lists were distributed, management had to wait for invoices from the billing system to find out what had actually been agreed to. Moreover, without clear and enforced guidelines, the sales team took it upon itself to set its own prices, which only compounded the firm's problems. Realizing that it needed to impose more discipline on the process, the leadership team identified and implemented a pricing software solution, which brought about several transformational changes:
- A new revenue and cost framework was adopted, which established a common ...
