Paul’s Pricing Dictionary: Uncompetitive Product Costs

Uncompetitive Products Costs, n.pl. The old lie 50% of the time; an uncomfortable truth for the other 50.

But how can you tell whether your product costs are competitive or not? Your Pricing Team should be protecting Sales from uncompetitive product costs while defending the Product Group against false assertions from Sales that the products are not cost competitive, and, at the same time – who said this was going to be easy? – protect the corporation from bullshit excuses from both. If it doesn’t, better call Paul.

 

Previously from Paul’s Pricing Dictionary:

Bad Selling, adj.+gen. Bad Selling is somehow always absent as an option in Bid-Loss analysis. But if there ever was a Bid-Win analysis, I’m sure that Good Selling would somehow get 100% of the credit. Of this I feel absolutely sure.

Currency, n. 1) The first refuge of the scoundrel when there is the slightest adverse movement in exchange rates to excuse crap business performance. This is a phenomenon which miraculously disappears just as soon as there is a beneficial shift in exchange rates. 2) Usually a key ingredient in a cocktail beloved of CEOs called “The Perfect Storm” to explain away a quarter of exceptional – and to everyone except them – entirely predictable under-performance (recipe available under NDA) 3) The perfect excuse for a list price increase and just one of the many reasons why list prices matter.

Defuddle, vb. What your Pricing Team does for you if you are befuddled, particularly on matters of channel demarcation, deal registration and sincerity.

Happiness, n. A feeling of well-being which is directly proportional to your gross margin %.

Haste, n. Hurry, rush. Price in haste, re-price at leisure. (Adapt., William Congreve, The Old Batchelor, 1693)

Insight, n. What your Pricing Team should be providing you with. Insight from your Pricing Team should come in two distinct flavors:

Business Insight, n – into your business performance

Competitive Insight, n – into your competitors’ performance

Margin Recovery Plan, n. A work of complete fiction written by Sales in the hope that no-one else will read it and, most of all, the author will not be held to account for its contents. Ever.

Organizational Memory, n. The Pricing Team. The Pricing Team remembers what worked and what didn’t work. It has a longer data retention period than anyone other than Tax. And unlike Finance, well, let’s just say, they are unlike Finance. The Pricing Team just knows where the data (coll. n. s.) is and lots, lots more. I thought I would list how much more but it started getting creepy so I stopped. You’re welcome.

Panic, n. If your Pricing Team isn’t panicking, don’t panic. But before you totally relax, please have your Pricing Team’s Pricing Intelligence checked out because there is a reason why they might not be panicking. However if the Pricing Team is panicking, then you should really feel free to panic.

Price, n. Value, plus a reasonable sum for wear and tear of conscience in demanding it. (qv, Ambrose Bierce, The Enlarged Devil’s Dictionary)

Pricing Drag, n. When your history of bad pricing and your disinclination to fix it creates a incessant drag on your business performance, your ROIC & consequently your stock price.

Pricing Intelligence, n. The first thing you lose when you allow your Pricing Team to break up. The second thing? Well, you shouldn’t have allowed your Pricing Team to break-up, otherwise you would have known what that was. (Your Pricing Team would have briefed you).

Strategic Deal, n. deal struck at a massively negative gross margin by CxO or Executive Sponsor, usually without any hope of margin recovery. See Margin Recovery Plan.

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