The 6-Step Pricing Strategy


Step 1: Price 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 how pricing impacts how executives make purchase decisions.

 


 

Step 2: Price 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 and Strategies

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

 

Phase 5: Competitive Price 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

Select a revenue model that will meet your objectives and satisfy the needs of your customers.

 

Phase 7: Versioning

Design product versions that allow customers to choose their own price point and buy faster.

 

Phase 8: Price Metrics and Fences

Choose appropriate metrics or fences to scale your pricing to customers with different willingness-to-pay.

 

Phase 9: Packaging

Package multiple products or solutions together to raise average sale prices.

 

Phase 10: Continuing Monetization

Set yourself up to grow customer revenues 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 11: Price Level Optimization

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

 

Phase 12: 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 13: Value Messaging

Drive up the customer’s willingness-to-pay with compelling messaging.

 

Phase 14: Negotiation Guidelines

Arm your sales force with techniques to win deals at maximum price.

 

Phase 15: Price Incentives

Improve adherence to your pricing strategy by aligning it to the sales team’s incentives.

 

Phase 16: Pricing KPIs

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

 


 

Step 6: Pricing Infrastructure

When developing your pricing infrastructure, you choose the appropriate pricing tools, systems, and software to help execute on your pricing strategy. Your internal pricing organization should be designed to produce and execute upon future pricing strategies through disciplined pricing governance.

 

Phase 17: Tools, Systems and Software

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

 

Phase 18: 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 James Wilton, SBI’s practice leader for Pricing Strategy.  Simply fill out this Form to request an introductory call and James will provide you with your own copy of the 92-page Pricing Strategy Workbook as a guide for your call.