Survey Shows Mixed Results on Pricing Maturity in the Manufacturing Industry

How does your organization rate on the pricing maturity scale? That’s a question the European Pricing Platform (EPP) recently asked of several hundred European manufacturing companies in its second Pricing Maturity Survey.

In 2013, the first Global Pricing Maturity Study from the EPP showed that many organizations were proficient in handling the basic functions of pricing. However, most pricing teams experienced difficulties executing their pricing strategies in the field. The survey showed how setting priorities and defining a clear roadmap are critical to pricing success. For its most recent survey, EPP wanted to learn if the same challenges still existed two years later. The short answer to that question is yes.

One of the key insights gleaned from the 2015 survey is that organizations seem to be either too humble or overconfident in their pricing abilities. The difference between the self-assessment and calculated maturity levels from the survey show that many companies don’t have a comprehensive understanding of how their pricing practices are impacting their business.

The survey data reveals that most companies still have much work to do to achieve the highest maturity scores. Key findings that support this conclusion include:

• Price strategy: Only nine percent of businesses are using mature pricing strategy development practices that align cross-functional marketing, sales and finance.
• Price policy: Only three percent of companies are using mature practices involving micro-segmentation and cross-elasticity to model and forecast the impact of price changes on revenue and profits.
• Price implementation: Forty-two percent of companies indicated they are selling on product features, product advantages or price but not on value to the end user.
• Price reporting: Only seven percent of companies have tools and processes in place that make competitive prices readily accessible.
• Price organization: Only 27 percent of businesses have a pricing team in place with a clear mission, defined KPIs, and a reporting structure directly to the C-Suite.
• Pricing tools: Only 13 percent of companies indicated they have a well-integrated CRM, CPQ, and ERP platform for a fully-integrated lead-to-cash system.

Organizations building pricing maturity are more likely to increase revenue and profit from improved pricing, discount discipline, better price setting, and improved sales alignment. The survey data shows that many companies are trying hard to build a mature pricing practice but that there is still work to be done. To read the full EPP survey report, click here.