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Pricing College Podcast

By: Joanna Wells and Aidan Campbell
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  • Summary

  • Get a free education when you attend Pricing College. Learn everything about pricing, value management, revenue management and how to build a pricing career. Join Joanna Wells and Aidan Campbell for entertaining and informative discussion every week.
    Copyright © 2020. All rights reserved.
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Episodes
  • Episode #0119 - What is Value Culture?

    Episode #0119 - What is Value Culture?
    Feb 3 2023
    Today's episode is a bit like Part B or a follow-up from our last episode a couple of weeks ago, where we introduced our new project, which we're calling Value Culture.   TIME-STAMPED NOTES: [00:00] Introduction [03:05] Why do not all companies have specialised pricing experts or teams? [4:35] What can Value Culture do? [10:19] What can clients benefit from Value Culture? [11:17] The Ultimate Objective And The Essence Of Value Culture   What is Value Culture?   Aidan: Hello, and welcome to another edition of Pricing College with your hosts, Aidan Campbell. And    Joanna: Joanna Wells.    Aidan: Today's episode is a bit like Part B or a follow-up from our last episode a couple of weeks ago, where we introduced our new project, which we're calling Value Culture. But I suppose in this episode, I wanted to ask Joanna, really, why is this sort of project happening? What did we see?   Why did we think companies needed this sort of product? Like, what is the need or what is the problem that a lot of businesses, smaller businesses and, you know, medium-sized businesses, are facing?    Joanna: Yeah, that's right. I mean, primarily, what we are doing is creating and implementing an essentially commercial platform called Value Culture, which is really aimed, as you said, at small and medium-sized businesses and enterprise businesses too.   And the reason that we have done this, and we're calling it a platform; it is a tech platform and not traditional consulting, is because we saw the mass need, the scale of the need of smaller, medium-sized businesses. Considering that about 98% of all businesses in Australia are small to medium-sized businesses.   In terms of the problem, we've seen consistently when we're speaking to startups, SMEs, medium-sized businesses, privately owned businesses, and then your ASX listed and Fortune 500s’ very common problems with pricing that we want to solve.   And ultimately, as you know, the problem was quite simple.   People feel that price can be something that is added at the end of a list of commercial tasks. For instance, when you're launching a new product, often the assumption is that it's okay. We can just set any price and then adjust that price later without really understanding the data inputs required to set pricing, the different pricing methodologies out there, and the metrics that they need to prepare and track along the way. And as you know, customer price response has a significant impact on your ability to change prices. Essentially, once you have your prices out there in the market, it's very difficult to change prices.   And often when people do that, companies small to large, when they just do that guesswork pricing or cost plus, they regret it because they end up essentially either overcharging their customers or losing revenue and volume.   You know, even selling below cost when they've got such great businesses essentially means they're undervaluing their proposition.   Aidan: I suppose, you know, here at Taylor Wells, one of the things I'd be very aware of, you know, on this podcast we've spoken many times about how getting a pricing person in really will give benefits to a company. But I think, you know, we're realists as well, and we're completely aware that if your business is doing a million Australian dollars in revenue, you know, you probably cannot afford, like, let's be honest, to go out and pay someone a hundred grand who's a high performer in pricing.   So I think, you know, there's a real gap in the market there. The vast majority of companies are small. As you said, Joanna, and I agree with that, there's a real gap whereby, in smaller companies, people tend to be doing multiple tasks. People tend to not be specialists, and the people often put their hand up and suffer the most stress and go, “Oh, I need some guidance on pricing. Can somebody help me today?” They fall into a trap, a gap, I guess, whereby they're not big enough revenue-wise to finance. A specialist, and to be honest, they're also, you know, there's not much point in getting consultancy for them either because there's nobody internally who could be dedicated.   Joanna: Oh yeah. Look, that's a great point, and that's a big part of the problem too. Pricing then just becomes this quite onerous task that puts real pressure on people who are really out of their depth and don't know where to start, what to do, or how to move forwards with pricing.   And really, what Value Culture does is give them that start, that ability to forge ahead when things are very unclear, the starting point, and then moving forwards, learning things step by step, getting the simple things mastered first before tackling the bigger, bigger things.   And then, step by step, feeding the right information in the right direction, whether that's in terms of getting the right inputs, data inputs, and information inputs together for price analysis and cost analysis or what, or whether it's more,...
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    14 mins
  • Episode #0118 - Why Pricing Requires CEO And CSuite Backing

    Episode #0118 - Why Pricing Requires CEO And CSuite Backing
    Dec 2 2022
    Why Pricing Requires CEO and Csuite Backing   Aidan: In today’s episode, we want to dig a bit deeper into a topic we’ve covered a couple of times in previous episodes. And that it’s vital, it’s so important that a pricing transformation or a major pricing project has CEO, C-suite backing.   And I suppose today we’re going to dig into that. We’re gonna do a bit of a question-and-answer format. Cause it works quite well. So we’ll be asking our resident pricing expert, Joanna, these questions. I suppose then she’s smiling at that suggestion. So the first one is, I suppose an open-ended question.   Why is it important to have CEO and Csuite backing?   Joanna: Well, let’s start with the simple truths and facts about pricing. The importance of CEO and C-Suite backing comes down to the returns that you can get from pricing. They’re more than substantial and very impressive when you compare a change in price to changes in cost volume, a mix for instance.   So you can say if you were going for a 2% increase in prices, versus not increasing prices, can lead to an impressive and direct flow to the bottom line of 20 to 30%. Obviously, here I’m thinking, volume is the same and constant and we’ve got our supply chain and costs in control.   But I think you can hear the message here if you just make very small improvements and changes to pricing. You can get a lot of money for it. So that’s why number one, it’s very important that the the C-suite understand how much monetary leverage they have with pricing.   And equally, if they do pricing incorrectly, how much margin they could potentially lose?    Aidan: Okay, so I think we understand, that’s clear that it’s important for the business, but does the CEO have to be involved in this project? Does the Csuite have to be involved? Can they not just delegate it down to a finance manager or someone like that?   Joanna: I like how you mentioned delegating down. It’s always about, I hear this a lot and look, I agree with delegating to the right people, but if that in itself can be a problem. I think initially it’s very important for the executive team. A) to understand the importance of it as I’ve already stressed, and B) to get behind it and to be shown as a consistent voice on the topic of pricing.   Even if their areas of expertise are in supply chain sales, and product pricing. They still need to get behind the pricing project because pricing often touches all of those areas inadvertently. And what we also find, if the executive team, you know, they’re role models for change.   What we commonly see within our clients, if they’re not really behind it, they don’t understand it, they’re not committed, and they’re just more focused on their area, almost this siloed culture. And they’re sort of paying lip service to the role of pricing.   Yes, it’s important we get that. But that really isn’t what I call sponsorship, that’s just lip service to sponsorship. You’ve really gotta take an active role because if the executives don’t do that, then it sends a clear message to anyone, that they’re gonna delegate the responsibility of pricing to that. It’s really not that serious, and they can just tack it on at the end of the normal day job and nothing really gets done. Or if it gets done, it gets done poorly.    Aidan: You know, that makes sense to me. I think we’ve covered also some other podcasts, and how pricing often slips between the gaps. Which function does it fit into? Is it finance? Is it marketing? Or is it sales? Or is it the commercial function, which some companies, let’s be honest, don’t really have?   So, I completely understand that it needs to be for a real pricing project to really work, it needs to work across multiple functions. So I completely understand that. The other thing I think is if, just on this point, if people do what they’re incentivised to do, and I think that concept you mentioned of leadership, role modelling. People know what if the higher-ups care about something. I think there’s an old anecdote about it.   Some executive, what do you care about today? I care about what my boss cares about, and that’s how you get promoted. So I think it is really important that it makes a lot of sense to me.   Joanna: I think, when you mentioned, Where it should be delegated to, should it be the finance manager? And often if there isn’t an established pricing team, it does go to some kind of finance manager often, or a commercial manager. And I think, when it gets down to it, the real reason why you need executive sponsorship, especially if you’re gonna move to strategic pricing or a value-based pricing system, you really do need sponsorship there because what you’re actually saying is, I’m going to change how we think about our customer.   How we think about how we do business, how we think about making money. We’re no longer going to anchor ...
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    21 mins
  • Episode #0117 - What is different in B2B pricing?

    Episode #0117 - What is different in B2B pricing?
    Nov 25 2022
    18 mins
Marketing Economics
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