Pricing for Profitability: What's in Your Pocket?
Gaining a handle on pocket margins can give CFOs another tool for growth.
CFO Insights - Pricing for Profitability: What's in Your Pocket?
CFOs have long been confident in their ability to affect the cost side of the margin equation. But with multiple layers of overhead wrung out of the system and product costs rising unabated, unlocking the price side has taken on a certain sense of urgency.
Effectively implementing a pricing strategy, however, is more than simply viewing products on a cost-plus basis. Instead, the promise of pricing is in the details: an effective strategy should rely on understanding economic profitability at a customer, product, and segment level—the so-called pocket margin—and using that information to inform overall decision-making. To get to that level of detail, though, may require overcoming cultural, data, and compensation barriers to determine pocket costs.
In this issue of CFO Insights, we’ll look at the power of understanding pricing at the customer level and discuss ways to install pricing disciplines that can deliver consistent positive results.
Download the CFO Insights article, "Pricing for Profitability: What's in Your Pocket?," to learn more.