Global manufacturers today face a host of challenges to remain competitive and agile in the volatile market. Effectively pricing products and services can be a tremendous competitive weapon if done well, or a liability if poorly executed. Consider the current dynamics for today's global manufacturers: rapidly-fluctuating prices, tougher negotiations with customers, high levels of outsourcing and increased complexity in the channel. These forces combined make strategic pricing a business imperative. When you consider the potential to quickly capture significant ROI, it's no wonder more companies are focusing on pricing now.

As a point of reference, pricing opportunities for a typical organization range from roughly 1% to 3% of sales -- it amounts to $10-$30 million in profits for every $1.0 billion in sales.

Pricing locally and harmonizing globally is about striking the right balance, but what is the best balance between local and global pricing? Pricing locally can negatively impact neighboring markets, while a one-size-fits-all approach to global pricing can leave local opportunities on the table. To use pricing as a competitive advantage, especially during uncertain economic times, manufacturing companies need to focus on pricing strategies. Most importantly, organizations must consider how global prices affect specific local markets and vice versa.

The following best practices will help you "think globally, price locally" to avoid leaving money on the table.

1. Build Consensus on the Need for Change

The most compelling drivers of change for business leaders are size of opportunity for pricing and short time to value, and success stories help bring more stakeholders and company leaders on board. For example, one leading manufacturing assigned strategic pricing management responsibilities to a senior executive who sits on the company's board of directors. Through executive ownership, this manufacturer successfully drove fundamental change in pricing strategies and practices across its global divisions to improve margins.

Beyond executive ownership and before changes are introduced, specific benefits for each pricing-related role within the organization must be identified. Role-based benefits include:

• Sales: Increased commissions using better tools and price guidance
• Product Management: Easier and faster process for setting more consistent, logical prices
• Price Management: Greater consistency and control over the pricing process; improved visibility; less data gathering and more analysis.

With a clearly-articulated opportunity, executives can develop policies and a communication plan to drive pricing best practices into the business. They should also develop a network of pricing professionals within the company to reinforce changes. To ensure success, pilot changes in important but manageable business units, then roll out proven best practices globally.

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