If you’re excellent at what you do, you should be paid accordingly.
The theory sounds simple enough, but often business owners fall short of charging for their own value.
Casey Brown has built a career helping change that. The owner of Boost Pricing, she first helped execute pricing strategy for the likes of General Electric and PPG. She now leads a team of pricing experts that works with executives and sales teams to instantly increase profitability through the power of effective pricing.
Brown will be among the featured speakers at the Prairie Family Business Association Annual Conference held April 27-28 in Sioux Falls.
We sat down with her for a preview of what attendees will take away.
First, what gave you the idea to focus on pricing? How did you identify that gap in the marketplace and help fill it?
The honest truth is I really didn’t. I didn’t identify it as a gap. I ended up in a pricing role in corporate America through a series of long events. I was an engineer by training and wanted to get out of the field, so I did a rotation at GE and ended up being exposed to pricing, and that’s where it got started. I wanted to get closer to the customer, but pricing also allowed me to be involved in a numerical and analytical exercise. I realized there’s also a lot of fear and psychology that gets wrapped into the decision-making, and once I took the role, I fell in love.
From a business perspective, what prompted me to start the business in 2011 is I saw it didn’t exist. There are some pricing training and consulting companies, but most people don’t know about this, and it’s kind of amazing to me how little attention is paid to it from a training and consulting perspective. Pricing is one of the things every business has to do, and most leaders will tell you they don’t have confidence they’re doing it with excellence. My idea was to bring what I had learned about pricing strategy and execution from Fortune 10 companies to the middle market, so I help smaller and medium-sized privately held companies. And there are many companies to help.
Are there some common mistakes businesses make when it comes to pricing?
A number of them. One that comes to mind is to buy into the belief that they don’t have pricing power. A lot of folks remember an economics textbook that says the market sets the price, and that’s a misconception. A lot of owners believe the customers and competitors have the power, and they’re doing the best they can. What I have proved with the work we do with clients is that there is unexercised pricing power in every business. If we grab those nickels and dimes, they add up to thousands or even millions in benefits. So not enough of us believe in our own pricing power. We abdicate that power to the market.
A second common pitfall is that most businesses don’t focus on it enough. They have sales initiatives and teams and dashboards and rocks, and they’re 100 percent focused on selling. And the thing that gets the least focus is making sure you’re getting paid well for all the excellence they’re providing. Those are very common — pretty much every single business we encounter.
Many businesses today are struggling to keep up with increased costs, so prices are rising by necessity. How do you suggest they navigate this environment while continuing to try to increase margin?
Most of the businesses that are best in class or better in class are actually gaining margin in this time rather than staying margin neutral because they’re very aggressive about both the timing, the speed and the amount they’re willing to ask for given inflationary pressures. The companies getting squeezed the most are afraid of damaging customer relationships. The entire world is paying more for every single thing we buy than we did a year or two or five ago, so I would argue it’s an opportunity as the entire world is resetting itself on what market pricing looks like to participate in that reset rather than get left behind. Ask for more, go quicker, go bigger.
The counter to that is what happens when inflation crosses into recession? What do we do then if you’re a business owner with ongoing increased costs as the market starts to soften, and customers hold cash and be more conservative? That can cause market contraction for some businesses. So this is where what I would say it’s a very surgical and strategic execution of pricing strategy. Product by product, customer by customer, service by service to stay margin neutral without losing market share. You do have to prepare in a different way for what’s coming rather than what we’ve just been through, where the question hasn’t been as much “What does it cost?” as “When can I get it?”
Do you have a rule for how often businesses should evaluate their pricing?
It’s a little bit tricky because, of course, you have different sales cycles for different industries or market conditions like inflation. Certainly then the time frame should be more frequent. As a rule of thumb, I say meeting quarterly about pricing at a strategic level organizationally to look at marketwide if you’re aligned to where you need to be to create as much value as you can while being competitive. If that’s too frequent, then it’s a quick meeting, but I would rather companies focus on it more often than less, especially as they’re building discipline around a higher degree of pricing rigor.
You also operate on and encourage the use of the Entrepreneurial Operating System, or EOS. What advantages do you find with this approach as it relates to pricing?
The idea of accountability is big, so it’s looking at who is accountable for price. It may not make sense to have a dedicated resource, but it should be somebody’s job. And the focus on data and metrics and a regular review of metrics is key. I don’t know of a single company not tracking margin and profitability, but they may not be enough to focus on pricing. Win rates can be a leading indicator that something is happening in the marketplace. If they’re going too high, maybe they’re a pricing opportunity because you’re underpriced relative to competition. It’s an example of the role data can play as a leading indicator to generate insights that allow you to move quickly. And then, EOS just provides clarity and speed for how important issues get raised and decided.
Are there any themes that stand out with family businesses and pricing? Is this an area they maybe don’t address as much as others?
Yes. All our clients are small and medium-sized privately held businesses. It may be family or it may not, but the nature of businesses of this size is that they are 100 percent focused on sales and operations. And when you’re talking about a family business, these are folks that see quality as part of their family legacy along with delivering an extraordinary customer experience. It’s almost a matter of family pride, which is phenomenal. The challenge is we’re so busy on sales and delivery that we’re modest in asking for what we’re worth. And a lot of family businesses have customers that have been with them for decades, so these are longtime, deep relationships that can make people apologetic in asking for their value. Plus, the Midwest and Plains tend to bring a very humble culture, which is good and endearing to customers, but it almost can work against pricing power.
What are you hoping attendees at the Prairie Family Business Association event take away from your keynote?
These businesses already run best-in-class organizations, so I know they’re looking for specific, actionable advice to take back and implement, and I will give that. There are always unique wrinkles to each industry and market, but good pricing execution is more industry agnostic than most people believe.
Casey Brown will share much more insight at the 2023 Prairie Family Business Association Annual Conference. Click here for information and to register for in-person or virtual attendance. And save $100 with early bird pricing through Jan. 31.