“A nation's culture resides in the hearts and

in the soul of its people.”

- Mahatma Gandhi

The Hofstede model distinguishes countries (rather than individuals) using cultural dimensions that represent independent preferences for one situation over another. In a similar way, each organization has its own pricing culture driven by the leadership team. The attitudes and preferences within the team, the systems and processes to support the goals, and the behaviors form the basis of the organizational culture.

Pricing usually affects many key stakeholders with each functional group having their own separate pricing objectives that can compete with other groups. The finance team may want higher prices to increase margins, the commercial team may want lower prices to increase market share while the product management team wants prices that are aligned across product lines to prevent cannibalization of one product to another.

There are many price setting approaches available which means that a successful strategy in one area doesn’t always translate to success in another. For example, applying list price increases to gain price realization in a business that sets its customer prices based on a cost-plus model would not be very effective. Furthermore, systems and processes introduced in the past based on old attitudes may drive behaviors that may not align with a value-based pricing approach. As a result, the rollout of pricing strategies from conventional standard pricing practices to a more sophisticated value-based pricing approach often involves a cultural transformation. Thus, executive sponsorship is mission critical not only in leading the process but also facilitating the transition as some people experience a paradigm shift during the transformation to value-based pricing principles.

Pricing work sessions should be done systematically to develop an awareness to the implication of current pricing decisions on other functional groups and help the team align to higher level objectives. It is imperative to define clear ownership and communication requirements at every step of the process.

Decisions should be supported by data with a sustainable and scalable approach. Price changes can then be applied strategically along the higher level business strategy communicated by the executive team. Only when this is done can you execute the pricing plan in a timely manner that brings maximum results with minimum effort.