Fixing the Leaky Boat

Posted by Reed Holden on Mar 19, 2019 11:44:38 AM
Reed Holden

Here's the question: Is it harder to set prices or control them once they are set? Next, think about where you spend most of your time? Sorry, that was two, but each is equally important. Why?  Because if you struggle with one, you’ll be too busy with the other to fix it.

Fixing the Leaky Boat Reed Holden articleSetting a price is like building a boat. If you build the boat properly – use the right materials, seal all the seams, and take care when applying the paint – it's not going to leak. If you don’t build it properly...good luck.

I have built two boats in my life. I was ten when I built my first and it leaked, a lot. I spent all of my time bailing water. Sure I could use it for fishing, but that was about it. When I built my second boat, I took my time. I had a good set of plans, made sure I used a wide seam of fiberglass and finished it with a nice epoxy paint. It didn't leak. I gave it to my daughter who was five at the time, and it still works 30 years later.

Why is this relevant? Easy – if you don't set your prices with purpose, you won’t have confidence in them and your sales team won’t either. No matter what you do, you're going to get a lot of price leakage. And, as a pricing professional, this means you're going to spend all of your time trying to control that leakage.

Here's the rule: The worse you are at setting prices, the more time you're going to spend trying to control them rather than working on other strategic priorities. You’ll never have time to develop a good strategy and product/service structure. You'll be too busy to understand competitive prices and their strengths and weaknesses. And, you’ll never have time to deal with salespeople in a supportive and productive manner.

Here's the point: If you're spending a lot of time bailing these days, then start setting aside time to fix your boat. You'll find that the leaks will slow and you can finally become a strategic pricer. That’s going to take discipline and you'll have to be diligent in setting aside time for strategic priorities. While this will be difficult in the beginning, if you don’t, I guarantee the water will just get deeper and deeper.  Good luck and don't get wet. Download Disounting Disease Whitepaper

 

Topics: Setting Price