The Finance Perspective: Unveiling the True Power of Pricing in Business

In the fast-paced world of business, where sales and marketing often take centre stage, it’s easy to overlook the critical role that finance plays in determining the success and profitability of a company. Contrary to common belief, pricing is not just a concern for the sales and marketing teams—it is, in fact, a finance matter. In this article, we delve into why pricing deserves more attention from finance professionals and how it can be a game-changer for any business.

Finance teams typically allocate more than 90% of their time to scrutinising variable and fixed costs. Surprisingly, less than 10% is dedicated to arguably the most potent profit lever: PRICE. Consider this scenario—everything else being equal, adding £1 to the top line translates to the entire £1 dropping to the bottom line. It’s a straightforward equation that showcases the direct impact of pricing on overall profitability.

For Finance Directors (FD) and Chief Financial Officers (CFO), taking an active role in pricing discussions is not just advisable—it’s imperative. If pricing decisions are delegated solely to the sales team or, in some cases, marketing, a dangerous race to the bottom ensues. The responsibility of shaping and optimising pricing strategies should be firmly in the hands of those who understand the intricacies of the financial landscape.

Furthermore, relying on cost-plus pricing models is akin to operating in the dark ages. While it may have been a standard practice in the past, it fails to capture the true essence of strategic pricing. To propel your business forward, it’s essential to evolve beyond cost-plus and embrace innovative approaches that align with the dynamic market conditions.

Now, let’s consider three key pricing questions that finance professionals should ask themselves:

1️⃣ Are you working on cost-plus to deliver a margin % number?

If your pricing strategy revolves around cost-plus calculations to achieve a specific margin percentage, it’s time to reassess. Our Pricing Masterclass can provide insights into modern, effective pricing methodologies.

2️⃣ Do you find it hard to implement price increases even when your costs go up?

If adjusting prices in response to increased costs feels like navigating a maze, our Pricing Masterclass can equip you with the tools and strategies to confidently manage price adjustments without compromising customer relationships.

3️⃣ Are you still charging clients by the hour?

Charging clients by the hour might be a restrictive approach that limits your revenue potential. Learn how to break free from this practice and explore more dynamic and profitable pricing structures through our Pricing Masterclass.

If you answered YES to any of these questions, it’s time to explore the transformative potential of pricing and profit. Our Pricing Masterclass unveils the strategies employed by industry leaders like Nike and Apple, demonstrating how you can apply similar principles to your business—regardless of its size or nature.

In conclusion, pricing is a finance-driven initiative that should not be underestimated. By actively leading pricing discussions and embracing innovative approaches, finance professionals can uncover the hidden opportunities and low-hanging fruits that lie within strategic pricing. To embark on a journey of pricing and profit transformation, reach out to us and discover how our Pricing Masterclass can empower your business.