I 3ssues Top
Words: Chris Merrington
There are more challenges than ever facing CEOs as the complexity of business continues to grow. Business is changing rapidly and CEOs need to be ahead of the curve. Chris Merrington works with directors to help them be more profitable and successful and here he looks at some areas which he believes, should be, but aren't always the top priorities for CEOs.
The first area is pricing. Price is the number one lever to improve profitability. If you don't get your price right it will make all your other business decisions much harder. Now normally pricing falls under the responsibility of the sales director but I believe the CEO should be actively involved. Price is not just an issue for sales. It is a critical strategic decision with far-reaching implication. Price in most businesses does not get the thinking and planning necessary. Pricing appears on the surface to be simple yet is far more complex than appreciated. Pricing should be a strategic decision that the senior team provide input for. Instead, too often it is delegated like selecting the numbers in the weekly lottery draw.
Wrong pricing decisions aren't easy to resolve. The most common mistake in pricing is under-pricing. Once your price is presented, if it is too low it will be difficult to increase in the near future. The price you charge a customer or client in 2013 will have a huge influence over the price you can charge that same client in 2014 and beyond. Price is not a one-off.
How much are you leaving on the table? How well do you negotiate? How could you have maximised your price whilst ensuring your customer is still delighted? How often do we win the deal and then wish we had charged more? In my workshops with senior teams we often discuss the reluctance to talk about money and the embarrassment many of us feel when talking with clients about money. In all other ways these senior business people walk the talk, except when it comes to money and pricing. They can turn into pussy cats instead of hungry brave lions when faced with a conversation about money.
Facing CEOs Today
The average life expectancy of the average CEO is now somewhere between 30 and 40 months*
60 | The Entrepreneur | JULY 2014
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