Pricing strategy should be a sculptor’s chisel, but more often it resembles a workman’s hammer

While most executives know that pricing strategies are essential to determining whether growth is profitable or achievable at all, many see their companies as price takers rather than price makers. They continue to leave pricing decisions to technicians relatively far down in their organizations. As a result, critical decisions are made without reference to the "big picture," and pricing, which should be a sculptor’s chisel, more often resembles a workman’s hammer.

In this article, we explain the most common ways that senior managers respond to pricing challenges and the three main problems these responses can trigger. We then draw on the case of a retail banking client (Anybank) to illustrate a new approach to pricing – one organized around collecting the right customer, competitor and cost information and building an integrated strategic pricing capability. Such an approach is starting to yield dramatic improvements in financial and organizational performance at this and other clients.