Does it make sense for your company to have a strategy without choosing a pricing model?
We think of strategy as the foundation of planning and implementation. It’s like the good nutrition an athlete needs to execute the weight building, running or other details of their regimen. If this seems like an approach that would help your firm hit your revenue/sales and profit goals, read on to understand our thinking.
Over the years I’ve encountered so many professional and business services firms that work hard on detailed strategic planning. Specifics vary but in general they focus on mission, vision, values, goals, strategies, initiatives, projects.
It’s the rare firm that includes the choice of pricing model in their strategic planning.
This omission is extremely costly. Your firm’s choice of pricing model impacts the execution or implementation of everything.
For example, most company’s vision and mission are aspirational and articulate outcomes to buyers.
And yet, when it gets to pricing the products and services that fulfill this mission, they choose time- based models. Time-based models are ONLY about inputs, not outcomes. They focus on deliverables and efficiency-how quickly can we produce that deliverable?
Deliverables are not the same as value delivered.
Goals are typically revenue goals and profit goals. They may include expansion goals and market share goals.
The choice of pricing model is integral to the revenue and profit goals and will impact expansion and market share.
Tell the World What You’re All About
We advise that the firm’s strategy comes first before the mission, vision, values, goals and so on.
The company’s STRATEGY tells the firm, and the world, what value it delivers to which buyers for what profit.
It’s that simple and deeply profound. It reads like this:
Our Company delivers X value to Y buyers for Z profit.
Your vision and mission then articulate how that strategy impacts buyers and what buyers can expect from doing business with your firm. This strategy also includes the impact of the pricing model you choose.
President, CEOs, Owners, and other firm leaders need to choose the firm’s pricing model first because it informs all other aspects of the company.
It cannot be a choice delegated to sales departments, or to accountants and financial officers. It is at the very heart of the company and affects every nook and cranny.
How are you putting the choice of a pricing model at the heart of your strategic planning?
If you’re curious about strategic planning that’s completed in half a day and that produces straightforward Strategy and Strategic Statements, let us know. You can hit reply or text STRATEGY to 703-801-0345.
