I know you have all heard the reference phrase at some point in your life, “how much money did you leave on the table?” It might have been a reference to what you paid versus the asking price or it could have been a reference to what you sold for versus the price you could have received. I know that whenever this phrase has been spoken to my benefit or I was not the one leaving money on the table, I always felt much better about that outcome. I do not think that anybody wants to feel that they have achieved less than a good outcome either personally or in their business when it comes to a financial result but it is always amazing to me how many businesses do leave a real financial upside on the table.
The upside I am talking about leaving on the table that is familiar to most businesses is the upside of price. It is amazing to me that not only do businesses spend so little time thinking about price but many businesses spend even less time measuring price. Price is one of those few actions that can be taken in a business that when implemented and achieved will drop through straight to the bottom line of the business. I talk with many CEO’s who are desperately looking for ways to improve their bottom line performance. When I get to conversations about price, it is astounding the blank stares I get as I ask a series of questions. Those questions often include things such as when was the your last price action to your market, how much of your increase was realized, how much of the price increase was actually collected, and what did your competition do before or after your action on price? So, little is known by most of them about a subject that has so much power to change their profitability.
It has often been said that one percent price increase is more valuable to a business than five percent improvement in productivity! If all this is true, then why is so little accomplished in planning and implementing price increases in the day to day business thinking. I will talk about this and more in the upcoming blogs; but for now please begin to think about the past actions and future potential of more strategic pricing actions in your business.