Pricing can be one of your business’s most strategic levers, but only if you do it right.
Too often, companies make critical pricing mistakes without even realizing it. In a recent webinar, Mark Rockwell, President of Rockton Software, highlighted some of the most damaging pitfalls and how to avoid them. If you want your pricing to drive profitability instead of creating chaos, it’s time to step back and rethink your approach.
How to Improve Your Pricing Strategy
The Excel Spreadsheet Trap: Why “Excel Hell” Is Costing You Money
Many businesses still rely on Excel to manage their pricing. After all, it’s familiar, flexible, and feels like a low-cost solution. But what starts as convenience quickly turns into a mess.
Here’s why relying on spreadsheets is risky:
- Single Point of Failure: Only one or two “Excel gurus” understand the formulas.
- Security Issues: Files are often shared insecurely.
- Version Control Problems: Which version is the right one?
- Error-Prone Processes: More complexity = more mistakes.
The truth is, Excel wasn’t built to handle the dynamic demands of modern pricing.
The solution? Implement an automated pricing system that ensures accuracy and scalability while freeing your team from spreadsheet chaos.
Cost-Plus Pricing: Your Safety Net Against Losses
While there are many pricing models, cost-plus pricing remains one of the most reliable. It automatically adjusts selling prices when costs change, ensuring you never sell below your cost basis. This strategy also helps cover overhead and operational expenses, removing the guesswork from maintaining profitability.
Many businesses are shocked during audits to find they’ve been selling some items at a loss. Cost-plus pricing eliminates this risk and brings structure to your margins.
Strategic Loss Leaders: The Psychology of Profitable Sales
Loss leaders aren’t just a grocery store gimmick but a powerful pricing tactic when used correctly. By intentionally pricing certain products lower, you can attract customers and encourage them to purchase complementary, higher-margin items.
Done right, this approach enhances perceived value and boosts overall sales. The key is to balance these low-margin items with smarter pricing on associated products and to use automation to make it sustainable across product categories.
Taming the Exception Monster
Every business has special deals, handshake agreements, or pricing scribbled on sticky notes. Over time, these exceptions create a tangled web that’s hard to track and justify. They lead to unpredictable pricing, hidden profit leaks, and decisions often driven more by ego than by data.
Instead of allowing these ad hoc discounts to run unchecked, you can implement structured discount fields, build approval workflows, and track special pricing separately from base prices. This not only keeps your margins intact but also brings clarity and control to your pricing.
The Ego Problem: Two Types That Undermine Your Pricing
Two common types of ego tend to wreck pricing systems.
First, there’s the “complexity ego.” Some pricing managers build overly complicated systems that only they understand, thinking it makes them indispensable. But it creates single points of failure, inefficiency, and resistance to improvement.
Then there’s the “salesperson ego.” Veteran sales reps often want full control over pricing, insisting they know what’s best for their customers. They may see automation as a threat or believe their relationships are the only thing that matters. While experience is valuable, relying on instinct over structure can create inconsistencies and make it impossible to scale.
How to Improve Your Pricing Strategy
If you’re still managing pricing through spreadsheets, relying on exceptions, or letting personalities dictate pricing decisions, it’s time for a reset.
Building a modern pricing strategy doesn’t require reinventing the wheel. It just requires discipline, structure, and the courage to move away from systems that no longer serve your business. With the right tools and a thoughtful approach, pricing can go from being a constant headache to a source of real strategic advantage.
Don’t let ego or outdated habits stand in the way of better profitability. Your pricing strategy should work for you, not against you. Curious about our solution on how to improve pricing strategy? Check out Rockton Pricing Management, the most flexible, powerful, multi-platform price management software you’ve ever used.
