What's your next?

As CFOs, among the most common challenges we assist with is increasing Profitability. While many assume this means we come in and cut costs, our response to this misconception often stops business leaders in their tracks: “You can’t cut your way to growth.” Now, costs definitely do need to be managed, and there is often opportunity to address how they are managed to impact the bottom line.

However, Pricing power propels profits, surpassing the savings seen from slashing costs. Raising rates by 5% will reap richer rewards than reducing costs by an equivalent percentage.

When speaking to large audiences of business owners, I usually ask a series of questions to help them understand the strategic importance of this concept.

“How many of you have raised your prices in the past 2 years?” Usually, 75% of the room raises their hands.

“How many in the past year?” 50% still up and proudly looking around smiling.

“How many in the past 6 months?” Now we seem to be down to around 25% of the room and questioning glances begin to circulate.

“How many have an active, dynamic pricing strategy that informs pricing decisions instead of reacting to increases in your costs?” Typically, only 1 or 2 hands remain raised in the entire audience.

Many businesses struggle with pricing because they focus solely on competition or cost, rather than on the value perceived by the customer. A common pitfall in pricing is the lack of alignment between what businesses believe their products are worth and what the market is willing to pay. Precision in your pricing strategy ensures that you are not just competitive but also profitable, by appealing to a broader customer base without sacrificing your margins.

Ultimately, the goal is to develop a pricing strategy that is as dynamic as the market itself. By staying attuned to market changes and consumer insights, you can ensure your pricing strategy remains an effective tool for driving business success. 

What does this look like in practice? Check out some of our ideas/content below for some tactical advice. 

Create Your Next! 

Inflation coming so quickly off the heels of the pandemic is creating cash flow and revenue issues for many organizations. In this article, we’ll explore how once-in-awhile price increases, especially knee-jerk reactions to outside dynamics, aren’t the path to sustainable growth – or even survival. 

“Commerce is not just e-commerce, because all commerce is e-commerce,” asserts Mike Batiste, the visionary Managing Partner behind Five Eighty, a Commerce Marketing Agency that shapes how brands interact with consumers across digital and physical realms.