Pricing Excellence is the result of a well-planned medium/long-term journey, and is comprised of the following three steps:
- Establishing a Corporate Pricing Practice
- Integrated Pricing Practice
- Pricing as a Competitive Advantage
In the previous part of this articles’ series we introduced the field of Pricing Excellence in Life Sciences. This part of the series will deal with the first step – how to establish a corporate pricing practice in your company.
A JOURNEY TO PRICING EXCELLENCE
In our experience with different Clients and businesses, we noticed a common pathway in three main phases that allows companies to achieve Pricing Excellence (Figure 3).
Depending on where a company currently finds itself in such pathway, priorities, stakeholder involvement and even market visibility are changing accordingly.
Figure 3: Support areas and examples of “typical situations”
1. ESTABLISH A CORPORATE PRICING PRACTICE
Pricing can appear as abstract and dispersed as ever due to its transversality across seniority levels, functions, products, markets, etc.
Therefore, the first step in achieving Pricing Excellence consists in establishing a Corporate Pricing Practice to work as a solid, structured backbone based on three key dimensions (Figure 4):
Figure 4: Pricing Practice Dimensions
Develop new Processes & SOPs – Define main Pricing processes and formalize them into standard operating procedures (Figure 5)*.
*Framework maps all pricing processes, which may vary according to products and regulations
Figure 5: Pricing Processes
Set up a Pricing Organizational Structure – Tailored according to each Company’s business specifics and wider organization (Figure 6);
Figure 6: Pricing Organization Models
Implement Support Tools – Four key steps to keep in mind:
- Properly understand and verify business requirements
- Ensure proper data management and consistency, in line with specific pricing needs
- Enable price performance visibility, with a relevant focus on Gross-to-Net
- Invest in change management (especially for Sales Force) to support technology usage
In the next part of this articles’ series, we will discuss next step in the journey of achieving pricing excellence – integrating pricing practice in your company.
Written by Paolo Correale, a Director at Tefen Italy, and the Head of Pricing at global level