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3 strategies to improve agile pricing decisions

To get ahead of the volatile market conditions, companies need to double down on an integrated approach to pricing.

It has never been more important for CEOs and their companies to have an agile, disciplined, pricing strategy. Tight labor markets, rising inflation and the unprecedented speed of changing consumer demand mean that pricing decisions that were once made every couple of years are now being made monthly, or even more frequently.

Yet many companies do not have a disciplined approach to pricing. They may not consider pricing in the wider framework of their strategic goals or have the alignment of the finance, brand and marketing, sales, supply chain, IT, and HR functions to make and implement frequent price changes. The sales force may lack the confidence, knowledge and incentives to capture the true brand value. On top of everything, many companies don’t have the data and tools needed to understand how much of their price increases are realized in the market and what effect these decisions have on volume.

So how can companies set the right prices, balancing rising costs with increasingly price-sensitive customers? Here are three strategies to help with that high-stakes decision.

1. Set a clear, data-based pricing strategy.

Pricing is not just an isolated action. It’s an enabler to where you want to go. To align pricing with your strategic goals, divide customers and products based on their importance to your brand. It also helps to understand how prices can resonate differently in different markets. Too much discounting can erode a brand, so while companies are trying to appeal to customers in an uncertain economy, they need to be careful that those customers don’t become addicted to the discounts. At the same time, companies need to be able to quickly adjust their pricing in response to customer reactions to price increases. 

2. Understand how much of your price increases actually stick.

Price realization, or how much of a planned price increase sticks after discounts or rebates, is a common challenge for many companies. Local teams may decide not to implement increases. Discounting and coupons could roll back the increases. It is essential to understand why pricing may be leaking, and then take corrective steps. “If you can’t identify the ‘where’ it’s happening, then it is going to be very difficult to fix the ‘what,’” says Brittany Easley, Senior Vice President, Strategic Pricing and Growth, Advance Auto Parts.

3. Improve governance and align incentives for your pricing strategy.

Set specific guidance for allowable discounting at the local level. Incentivize both employees and customers based on the desired outcomes, such as pricing for margin or for hitting certain sales commitments. Coach salespeople to be able to explain the price increase to customers and, when possible, bundle a price increase with a product improvement to shift the focus of the conversation. Most importantly, follow through, as pricing is no longer a set-it-and-forget-it exercise. It’s important to revisit your prices to see how they performed and what adjustments you may need to make going forward.


In the current economic environment, companies are seeing costs increase but are no longer able to pass them along to customers as easily as in recent months. To secure their margins and customers, executives need to understand how pricing plays into their overall brand strategy, get a clearer sense of how much proposed price increases actually stick and why, and make sure the entire sales organization understands and can communicate pricing strategy in a value-based way.

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