Why Did You Fire Your Pricing Manager?

We asked some of our subscribers if they recently had to let a pricing manager go and if so, why. They shared some very insightful stories. From the responses, it became clear that there were several key themes. Many participants mentioned that the pricing manager lacked attention to detail, failing to understand the nuances of the company’s pricing strategy or misinterpreting data, as well as not trusting experienced advice from colleagues. Furthermore, there was evidence of a lack of vision from the pricing manager, as they were unable or unwilling to make necessary adjustments to changes in circumstances and customer needs. Lastly, many readers pointed out that communication skills played an important role in their decision-making process, citing issues with a refusal to collaborate with other teams or failure to speak in plain English instead of statistical lingo. This highlights how essential qualities such as detail, vision and strong communication are for success in this role.

A Lack of Passion for Profitability

“They just didn’t care enough about total profitability.”

Pricing managers need to have a passion for profitability because it is the ultimate goal of your pricing strategies. Without understanding and appreciating the importance of achieving maximum profits through accurate pricing, your management team and other employees may be skeptical about implementing price changes as they can be perceived as risky or not worth the investment. Having a keen eye for profitability allows pricing managers to clearly explain their reasoning and provide concrete evidence that their proposals are in line with market fluctuations, customer interests, and most importantly the bottom line. A passion for profitability ensures that pricing managers stay on top of their game and make well-informed decisions that will benefit long-term growth.

Poor Attention to Detail

“Our first pricing manager lacked attention to detail and would hurry to make price changes without checking with sales or purchasing. Even if they were correct 95% of the time, the other 5% caused us not to trust 100% of our pricing and our sales reps would override pricing all the time.”

Managing pricing in the distribution industry requires stringent attention to detail because of the complex set of variables involved. Accuracy is essential to ensure that prices remain competitive within the market, as customers increasingly have more access to information about pricing norms and potential discounts. Historical data about customer behavior should also be taken into consideration when making decisions as this provides valuable insight into consumer preferences and expected purchasing patterns. Replacement costs are also a key ingredient for consideration when setting or adjusting pricing as it can help with ensuring that profits are not lost due to mismanaged inventory levels or potential discrepancies between projected and actual sales figures. Attention to detail allows pricing managers to make informed decisions that are tailored to the company’s objectives in terms of profit maximization, customer satisfaction, returns on investment, etc.

Lacked Ownership and an Opinion

“We had to let go of a pricing manager as they failed to provide a clear direction and strategy when it came to making changes in prices. Furthermore, they were not willing to advocate for their point of view or actively defend their decisions related to pricing adjustments. Because of this lack of foresight and commitment, we felt it best to end the employment relationship.”

Pricing managers should have a clear vision on the top priorities for price changes so that they are able to effectively lead on profitability. While sales or purchasing agents may point out certain opportunities or potential threats, it is ultimately up to the pricing manager to weigh all the evidence and make an informed decision. By taking ownership of their role, they will be better equipped to identify areas of improvement, set goals, provide direction and guidance, and ensure that everyone is working towards a common desired outcome. Pricing managers should also be mindful of how their decisions affect not only the company’s bottom line but also its reputation in the marketplace. Having a well-defined vision enables pricing managers to drive pricing from a proactive stance instead of passively accepting suggestions from others.

Aligning Too Closely with the Sales Team

“We haven’t fired anyone for this, but every pricing manager we’ve ever brought on gets immediately sucked into the whims of the sales team. We have to tell them that their understanding of pricing and profit has to be much wider than just the sales team or else we would’ve just taken the advice of sales for pricing in the first place.”

It is important that pricing managers don’t get all their information solely from sales reps as they are not privy to all the data points needed to make informed decisions. As well as getting the customer’s perspective on prices, it is also essential that pricing managers are aware of inventory levels, purchasing discounts and rebate goals to ensure a successful pricing strategy that maximizes profitability. Without considering these other factors, sales reps can be influenced by short-term fluctuations in the market and fail to consider long-term pricing plans.

Thinking Their Job is About Making Price Changes Instead of Making Profit

“We had a pricing manager that was a constant tinkerer. I think he was making changes all the time just to look busy. I’m OK if you tell me pricing is fine and we don’t need to change anything for a while, especially if we’ve got data to back it up.”

Pricing managers should not be tempted to make needless changes just to appear busy; data is vital in making informed decisions and when it shows that things are running well, no major adjustments are necessary. Although it is important to strive for continuous improvement, this should not equate to frequent change for the sake of change. Over-amending pricing plans can detract from profitability, cause confusion among customers and disrupt the harmony of the pricing system. That’s why it’s essential to balance looking busy against making calculated changes when they are absolutely needed.

“Too many price managers are focused on the trees, not the forest. Maybe I’m trying to get that next rebate level and quantity is more important to me right now than short term price.”

A successful pricing strategy should be based on the overall objectives of the company. As such, price managers must be able to look beyond short-term gains and analyze pricing decisions considering how these will contribute to achieving corporate goals. This may include focusing on long-term objectives such as market share, customer loyalty or entering new markets. Furthermore, a well-thought-out pricing strategy could also involve utilizing pricing tactics such as loss leader pricing or bundling to reach specific targets, such as increasing volume or gaining competitive advantage. It is important that price managers have an understanding not just of the numbers but also the strategies behind them so they can develop a robust and effective approach that reflects company objectives.

Recommending the Wrong Price Optimization Solution

“We fired a pricing manager who insisted we choose a well-known price optimization software that didn’t really fit our business. It was costly to implement, made some disastrous suggestions and we ended up losing money.”

Choosing the wrong price optimization solution can be a costly mistake for distribution companies. Generic software solutions are often not adequate when dealing with the specific complexities and nuances of the distribution pricing model, such as wholesale discounts and bulk ordering. A lack of industry-specific features can lead to inaccurate projections, incorrect margins and missed opportunities to maximize profitability. Furthermore, inefficiencies caused by using the wrong system can result in an increase in operational costs due to manual intervention needed to make up for inadequate automation. It is important that distribution companies find a software solution that is tailored to their needs.

Lacked Communication Skills

“I don’t want to hear about stochastic this and multivariate that. Talk to me and the rest of the company in plain English if you want to get your point across. And no more 100-line spreadsheets crammed into a presentation deck.”

Excellent communication skills are essential for pricing managers as they are often required to explain highly technical information to a variety of stakeholders, including those with less experience in pricing. Being able to clearly articulate the data, models and strategies behind their proposals is key to gaining buy-in from those who may not be conversant in the details. Moreover, persuasive communication requires an ability to listen and take onboard input from other departments such as Sales and Purchasing. A good pricing manager knows how to get stakeholders on board, be it through consensus or presenting a compelling business case. Working collaboratively and effectively with others is crucial for success within these roles.