A Pricing Manager determines pricing schemes for a company’s products and services. This includes co-ordinating with production departments to learn how much they cost to make, as well as working with staff in marketing on appropriate campaigns and promotions. The costs of shipping, handling and related expenses also need to be considered when pricing products.
As companies prepare to roll out new products and services, the Pricing Manager evaluates them to set policies on pricing. These include the base price as well as discounts that may be extended to specific retail partners and dealers. The Pricing Manager needs to consider what kind of message the company wants to project with pricing, and how the marketing department will handle promotional campaigns.
1. Pricing Strategy Selection
The Pricing Manager will need to liaise with the leadership team to understand the business objectives. Whether for example, the business is targeting revenue growth, profit growth, market share improvement, or stability. Only once the business objective has been fully understood, can the Pricing Manager select an appropriate pricing strategy to complement and support the achievement of the business objective.
For example, if profit growth is required, the Pricing Manager will need to ensure their pricing strategy protects margins. Alternatively, if the business objective is to win market share, the pricing strategy must support competitor benchmarking and allow price reductions.
2. Conduct Market Research
It is always sensible for a pricing manager to keep a watchful eye on their competition to try and learn their pricing strategy, and assess any weaknesses that can be taken advantage of. For example, you might identify that your prices are a lot more expensive than your competitors, so a price reduction will be required. Alternatively, you might identify that your competitors are only changing prices once a week, so you can adjust the timings of your own price changes to coincide exactly after your competitor's price change, so you have a whole week of your price beating theirs.
3. Implement the Pricing Strategy
Once you have selected your chosen pricing strategy, whether you're deciding to be competitor-led, supply-led, demand-led, a mix, or other, you need to put in place the appropriate pricing processes, pricing tools, and pricing personnel to be able to action your pricing strategy.
The pricing process may document your selected pricing strategy and how it intends to support the business objective. The pricing tooling may just simply be to support competitor price monitoring, or it may provide additional assistance with price automation.
If you have a large product count, it may be appropriate to hire pricing analysts to join your team to support you with the decision-making.
4. Assess the Effectiveness of the Pricing Strategy
Once you have implemented your Pricing Strategy, you will need to identify if the pricing strategy is working. For example, if you have set a particular objective to grow your market share, you might assess how much your share of impressions, click-through rates, and revenue has grown on specific products that you have changed the price for.
5. Liaise with other departments
One of the most underused responsibilities of a pricing manager is data sharing. Pricing touches so many areas. It can support purchasing decisions (any product overlaps I can exploit?). It can support negotiation decisions (competitor X is selling much cheaper than me, they must be getting a better price from the supplier). All the way through to, supporting marketing conversion, as click-throughs can be held back if you're too expensive.
Therefore speak to your colleagues, share data, and share insights, as you never know what nuggets of wisdom will be unlocked.