Adam Smith is a finance manager for a large division in a multinational corporation, FMG Ltd. He needs to find ways to provide value-added analysis to pricing decisions made at FMG Ltd. He has found it difficult to get good information on pricing-related data. He knows that sourcing out this information is critical to improving his role in the pricing decisions process. Prices and price data are measureable and significantly affect the financial performance of the firm. Adam knows that if he can improve his contribution, he can improve not only his budgets and forecasts but also the firm’s financial performance. Adam starts by evaluating the customary roles each function has in pricing decisions at FMG Ltd. He then assesses the internal impact of corporate pricing decisions so he can account for these in his recommendations.
Adam also studies the information available to use in a pricing analysis. He evaluates various pricing strategies such as real-world uses of price elasticity information, price discrimination strategies, and various types of market environments and their implications on pricing.
Adam further evaluates a competitor’s potential reaction if FMG Ltd. raises its price. He also reviews cost analysis and product life cycle and their implications for product pricing decisions so he can improve his recommendations to senior management.
As a finance professional, you may find yourself in a situation similar to that of Adam. While the sales and marketing functions are primarily responsible for determining price, the finance function also plays an important role. As a finance professional, you can not only bring good financial information to the table but also provide a total company view. By implementing tactics and techniques to improve the role of the finance function in pricing decisions, you can provide effective advice to senior managers on pricing decisions.
How strong is the pricing analysis and advice of your finance team? The Accenture Academy course Examining the Finance Role in Product Pricing Decisions
gives finance professionals best practices and tactics to help them improve the art of pricing decisions.