Pricing and Year-end Budgeting
- by Leslie Kerr
Retailers are stuffing our mailboxes and email inboxes with last-minute specials, holiday dinners are in full swing, and Salvation Army bells are ringing. It can only mean one thing: It’s year end. And you know what that means: It’s budget time. It’s clear from my inbox that plenty of companies are in the throes of building their 2013 budgets and planning pricing projects.
As 2012 draws to a close, here are a few thoughts on how to budget for pricing.
1. Don’t Worry if Your Pricing Budget is Small
If you can’t allocate huge dollar amounts to pricing projects, start small. While it won’t get you everything on your wish list, you can begin to address the topic with even a few thousand dollars. Use this money for an evaluation of your pricing process, initial competitive research, or for a meeting to understand pricing issues and develop some pricing goals. It’s not all about having the biggest budget. With creative thinking, you can stretch a shoestring budget and accomplish more than you think. See where you can get with a toe in the water in 2013 and set the stage for additional work in 2014.
2. Be Sure Your Budget Isn’t Too Big
If you are fortunate to have a large pricing budget, scrutinize what you already spend. Are your vendors cost-efficient? Do you need every service for which you are paying? Do you conduct some projects out of habit, or because they are necessary on a continuous basis? Have you gotten the best value out of each product or service you purchase? Reviewing expenditures may reveal some budget savings for you and enable another department to embark upon projects they might not otherwise be able to undertake.
3. Evaluate Your Pricing Results
Pricing projects generate significantly high returns and pay for themselves. Consider the return on pricing past and future investments as a way to keep track of how they are helping (or would help) your company. This could help you retain your budget or add dollars where you have none.
4. Think Long Term
Set the stage for future years with your current budget exercise. Some pricing initiatives are one-time endeavors, while others require recurring work. Communicate this to the purse string-holders, and it will pave the way.
If you are lucky enough not to be on a Dec. 31 year end, enjoy the break and file this away for your next budget cycle. This advice will not expire.