Pricing Strategy
The Revenue Growth Methodology

The 5-Step Pricing Strategy


Step 1: Segmentation

When you plan your pricing strategy, you accomplish three objectives. First, you focus on markets where you can develop and exercise pricing power. Second, you prioritize accounts that appreciate your value proposition and that are willing to pay for it. And third, you understand how pricing impacts how your buyers make purchase decisions.

 

Phase 1: Markets

Focus on the markets where you can develop and exercise pricing power.

 

Phase 2: Accounts

Prioritize accounts that appreciate your value proposition and are willing to pay for it.

 

Phase 3: Buyers

Understand the pricing implications of how buyers buy.

 


 

Step 2: Positioning

With great price positioning, the pricing team consistently matches the business objectives of your growth strategy to your pricing strategy. From here, the pricing team understands and influences buyer perceptions through the development distribution of competitive pricing positioning.

 

Phase 4: Business Objectives & Strategies

Match the business objectives of your growth strategy to your pricing strategy.

 

Phase 5: Competitive Positioning

Understand and influence buyer perception.

 


 

Step 3: Price Structure

First, you should select and maintain a revenue model that will meet your business objectives. Second, you should design product versions that allow customers to buy faster. Third, you scale your pricing to customers with different willingness-to-pay thresholds. Then, you package multiple solutions together to raise average sale prices. Finally, you grow revenues through continuous monetization efforts.

 

Phase 6: Revenue Model

Align your pricing model with the value your customers expect to gain from your products.

 

Phase 7: Versioning

Design product versions that will increases average selling price and what your customers buy.

 

Phase 8: Renewals

Capture more value from your existing base of customers over time.

 

 


 

Step 4: Price Levels

Price levels help you optimize your price levels and provide structured discounting in several ways. First, you determine the viable price range and continuously optimize price levels for customers based on their willingness-to-pay. Then as needed, you discount strategically in order to increase sales volume and average deal size.

 

Phase 9: Price Level Optimization

Determine the viable price range and optimized price for customers based on their willingness-to-pay.

 

Phase 10: Structured Discounting

Discount strategically to increase sales volume and average deal size.

 


 

Step 5: Price Execution

Price execution enables you to drive up the customer’s willingness-to-pay with compelling, value-based messaging. You can then arm your sales force with negotiation techniques and guidelines to win deals that maximize price. This is how you improve adherence to your pricing strategy by aligning it to the sales team’s incentives and compensation plans. Finally, you actively track the right key performance indicators (KPIs) to ensure your pricing strategy is successful.

 

Phase 11: Value Messaging

Maximize wallet share and drive up the customer’s willingness-to-pay by market segment with compelling messaging.

 

Phase 12: Negotiation Guidelines

Arm your sales force with techniques to win deals that maximize price. Integrate these techniques into your coaching plan and your Opportunity and Account Management Processes.

 

Phase 13: Price Incentives

Improve adherence to your pricing strategy by aligning it to the sales team’s Compensation Design & Quota Setting.

 

Phase 14: Price KPI’s

Track the right metrics to ensure your pricing strategy is successful.

 

Phase 15: Tools, Systems and Software

Choose appropriate price software to help execute on your pricing strategy.

 

Phase 16: Pricing Governance and Organizational Design

Design an internal pricing organization to produce and execute upon future pricing strategies.

 


 

Would you like to explore how SBI can help with your pricing strategy?

Request an introductory call with Jacqueline Davis, SBI’s practice leader for Pricing Strategy.  Simply fill out this Form to request an introductory call and Jacqueline will provide you with your own copy of the 92-page Pricing Strategy Workbook as a guide for your call.

 

And check out Jacqueline’s most recent pricing blog “Three Reasons Companies Struggle to Execute Value-Based Pricing Strategies”.