An effective pricing strategy can be one of the biggest influencers of profit margins for a company, yet it remains one of its most complex functions. And according to a recent B2B pricing survey from the Professional Pricing Society (PPS) and pricing software provider Zilliant, it's also the area allocated with the fewest resources.
The benchmarking survey polled more than 500 pricing professionals in manufacturing, distribution and industrial services to shed light on their methods, perceptions and trends in pricing practices and capabilities.
One of the key points made in the survey was the growing focus on pricing among top-level management, as a vast majority of respondents (82%) cite "high" or "very high" levels of executive attention on the pricing function. According to Eric Mitchell, president of the Professional Pricing Society, pricing strategies have gained a lot of attention from C-level executives, including purchasing and supply chain officers.
"Working as a team, these individuals have started turning their attention largely to improving the revenue side of their balance sheets," Mitchell says. "There is a lot of top-down focus on pricing strategies, tactics and processes because it is so closely tied to profitability. It is among the top strategies companies are employing to improve their pricing effectiveness and avoid leaking revenues out of the company unnecessarily."
The results also point to widespread improvement initiatives, with only 6% of respondents describing their current pricing processes and tools as "very effective," while 73% say they have active price improvement initiatives under way. While many companies have not implemented pricing software as of yet, the survey contends that the technology can play a key role in process improvements. Almost half (48%) of the respondents say they are currently considering, evaluating or deploying price management software.