Move guide
Make it stick
Your report suggested a move on at least one of these three practices:
- whether incentives point the same way as the strategy;
- the skills and habits of the people who touch price;
- how pricing decisions get made.
The earlier steps change how price is set and given away. This move guide makes the change last. Sales pay, skills and the yearly calendar all point the same way as the pricing work, so it survives a change of owner.
If you took the consumer check, go to the consumer section. If your products reach shoppers through retailers, go to the section for brands.
1. When it applies
Use this move guide if your report placed sales incentives or pricing skills in the lowest two stages. Use it too if it placed how pricing decisions get made at the middle stage.
| Practice | Where it may sit today | Where this move guide aims |
|---|---|---|
| Whether incentives point the same way as the strategy | Lagging: "Sales pay ignores price: it rewards revenue, volume or the company result, so every discount that closes a deal is rational." Basic: "Margin is on the sales scorecard, but a discounted deal pays the same bonus as a full-price one." |
Competent: "Sales incentives include price or margin outcomes with real weight." |
| The skills and habits of the people who touch price | Lagging: "Nobody in the business has been trained in pricing, ever." Basic: "One person understands pricing; the knowledge leaves when they do." |
Competent: "Sales and commercial staff get pricing training, and negotiation preparation includes price positioning." |
| How pricing decisions get made | Competent: "A regular pricing forum decides list moves, big deals and exceptions, with decisions minuted." | Advanced: "Decision rights are written down (who decides, who is consulted), and the forum works from analysis, not anecdote." |
If how pricing decisions get made sits in the lowest two stages, start with naming the owner and setting the calendar.
2. What to do
Seven steps. Incentives change at the next plan cycle. Training runs in the first quarter. The yearly cycle takes six to twelve months to become routine.
- Read the sales incentive plan. Find every place where a discount raises a salesperson's pay. The incentive plan calculator shows what the plan pays near target.
- Give price or margin real weight at the next plan cycle. Add margin or realised price, the price you actually get after every discount. Give it enough weight to change a decision on a deal. Test the new plan on last year's deals before it starts.
- Train the people who touch price. Cover the price waterfall, elasticity, margin sums, menu logic and how to anchor a negotiation. Add price positioning to the preparation for big deals.
- Write down who decides what. Name who decides and who is consulted for each common pricing decision.
- Run the forum from the monthly pack. Each decision in the minutes cites the analysis behind it.
- Set the yearly pricing calendar. It covers the strategy refresh, list reviews, the increase, the segment review and training. Table A below does this. Keep one controlled price test running each half-year.
- Retake the check after twelve months. Ask your team to take it too, and compare the results practice by practice.
The three free worksheets do the recording:
- /worksheets/pricing-b2b/sales-alignment for reading the plan, the new plan and its test on last year;
- /worksheets/pricing-b2b/capability for the half-day session and the deal preparation sheet;
- /worksheets/pricing-b2b/decision-rights for who decides what.
3. What to produce
One table, plus the three worksheets above.
Table A. The yearly pricing calendar
| Month | Strategy refresh | List review | Price increase | Segment review | Training | Price test | Owner |
|---|---|---|---|---|---|---|---|
Put the calendar beside the budget calendar, so the increase and the list review land before the budget is set.
4. A worked example
Illustrative. Written for this move guide. It describes no client.
An office furniture maker sells to businesses and government through 30 sales staff.
The incentive plan.
- The bonus was paid on revenue alone. A deeper discount that closed a bigger deal paid a bigger bonus.
- At the next plan cycle, a third of the bonus moved to gross margin on each salesperson's deals.
- Tested on last year's deals, the new plan would have paid the top three sellers about the same and two heavy discounters less.
The training.
- Forty people who touch price took a half-day session in the first quarter.
- Every deal above a set size now had a one-page preparation sheet, with the price position and the walk-away price.
The decisions.
- The decision table named who decides and who is consulted for twelve common decisions.
- The forum's minutes cited the monthly pack for each decision.
Twelve months on.
- The yearly calendar had run once, from strategy refresh to increase.
- The leadership team retook the check, and so did a dozen people in sales and finance.
On a retake, all three practices could be answered at the target stage.
What it looked like in our work
From our own work. Redrawn.
The pricing training we ran for the people who touch price. Each session opened with a discussion question before the method.
- Why pricing mattersWhat a small change in price does to profit, set against volume and cost.
- A typical pricing projectScope, quick wins and optimise, and the evidence of problems at each level.
- Scoping and quick winsAssessing pricing capability, customer profit, pocket price and skewed incentives.
- The purchase decisionEconomic value against the customer's best alternative, and what stops a customer paying it.
- Competitive conflictWhen to respond to a competitor's price move, and how to manage what you know about them.
- Pricing strategies and bundlingMenu pricing, versions and packages.
- Measuring elasticityHow volume responds to price, and how to measure it.
A capability grid: basic, average, advanced
Illustrative.
Rate the pricing capability row by row before you plan the training and the incentives. Four of the rows bear most on whether a change sticks.
| Basic | Average | Advanced | |
|---|---|---|---|
| Pricing discipline | Sales has wide discretion and few checks. | Clear rules on prices and discounts, not tied to incentives. | Rules everyone knows, and incentives that back them. |
| Incentives | Many schemes, uncoordinated, rewarding past behaviour. | The worst schemes cleaned up, with rules on when each applies. | One set that rewards the behaviour you want next. |
| Price sensitivity | Each rep or sales manager decides. | A rough view from customer interviews. | Measured in controlled price tests. |
| Rivals' prices | Not recorded. | Checked now and then, as a rough guide. | Tracked all the time and used in every price decision. |
The full grid adds the business objective, the segmentation, profit modelling, customer interviews and needs mapping. A business at basic on incentives will struggle to hold any price change, however good the analysis.
5. Effort and dependencies
- Chief executive and HRChange the incentive plan.
- Pricing ownerRuns the training and the calendar.
- Pricing forumKeeps the cycle going.
What you need
- The current incentive plan and last year's deals, to test the new one.
- The monthly price pack from reporting price performance every month.
How long
- Incentives change at the next plan cycle.
- Training runs in the first quarter.
- The yearly cycle takes six to twelve months to become routine.
What gets in the way. We have seen these in our own work:
- The incentive plan undoing the work. It happens in more than one industry. The incentive plan set what sales did, more than the price list.
- Underfunding the change. An industrial distributor needed well over a year of effort, with money for training and communication.
- Expecting the front line to change fast. Our own process notes found that front-line habits change slowly. Start building pricing skill early.
6. How will you know it worked?
The test is whether the practice survives a year. Retake the check after twelve months. Each of these should be true when you answer:
| Practice | You can answer the target cell when | A document alone does not count if |
|---|---|---|
| Whether incentives point the same way as the strategy | Sales incentives include price or margin with enough weight to change a decision on a deal. | Margin is on the scorecard, but a discounted deal still pays the same bonus. |
| The skills and habits of the people who touch price | The people who touch price have been trained, and preparation for big deals includes the price position. | The training ran once, for whoever was free that day. |
| How pricing decisions get made | Decision rights are written down, and the forum's decisions cite the analysis behind them. | The table is written, but decisions still come from the loudest voice. |
For consumer businesses
This section is for the B2C Consumer Pricing Health Check. Here the work lasts when everyone who sets prices, promotions and markdowns shares the basics and one target.
When it applies
Use it if your report placed pricing skills in the lowest two stages, or the alignment of marketing, merchandising and finance at the middle stage.
| Practice | Where it may sit today | Where this move guide aims |
|---|---|---|
| The skills and habits of the people who touch price | Lagging: "Nobody has been trained in pricing; instincts substitute for method." Basic: "Pricing knowledge lives in one analyst and leaves with them." |
Competent: "The people who set prices, promos and markdowns have been trained in the basics of elasticity and margin math." |
| Whether marketing, merchandising and finance are aligned | Competent: "The promo calendar, range plan and price moves are agreed jointly on a cycle." | Advanced: "Shared targets (realised margin, price image) make the trade-offs explicit and owned together." |
If the alignment sits in the lowest two stages, start with naming the owner and setting the calendar.
What to do
- Teach the basics in one half-day. Cover elasticity, margin sums and how a price is framed, for everyone who sets prices, promotions or markdowns.
- Set one shared target. Choose realised margin or price image, shared by marketing, merchandising and finance.
- Add the promotion calendar to the yearly pricing calendar. Table B below does this.
- Retake the check after twelve months, and ask your team to take it too.
The two free worksheets do the recording:
- /worksheets/pricing-b2c-direct/capability for the half-day and the record of who came;
- /worksheets/pricing-b2c-direct/cross-functional for the shared target and the joint cycle.
What to produce
Table B. The yearly pricing calendar
| Month | Strategy refresh | Price moves | Promotion calendar | Markdown periods | Training | Price test | Owner |
|---|---|---|---|---|---|---|---|
A worked example
Illustrative. Written for this move guide. It describes no client.
A beauty retailer sells through 50 stores and a website.
- Thirty-five buyers, marketers and e-commerce staff took the half-day session.
- Marketing had been measured on sales and merchandising on gross margin. Both now shared one target: realised margin.
- The promotion calendar moved into the yearly pricing calendar, beside price moves and markdown periods.
- Twelve months on, the leadership team and the trading team retook the check.
On a retake, both practices could be answered at the target stage.
Effort and dependencies
- Who. The chief executive sets the shared target. The pricing owner runs the training and the calendar.
- What you need. The targets each function is measured on today.
- How long. The training runs in the first quarter. The shared target starts at the next plan cycle.
- What gets in the way. Targets that still pull apart. If marketing is paid on sales alone, the shared target loses to the bonus.
How will you know it worked?
| Practice | You can answer the target cell when | A document alone does not count if |
|---|---|---|
| The skills and habits of the people who touch price | The people who set prices, promotions and markdowns have been trained in elasticity and margin sums. | The training was offered, and few of them came. |
| Whether marketing, merchandising and finance are aligned | Marketing, merchandising and finance share one target, and the trade-offs between them are decided against it. | The target is shared on paper, but each function is still paid on its own. |
For brands selling through retailers
This section is for the B2C via trade Brand Pricing Health Check. For a brand, the work lasts when account managers are paid on net sales or margin, and have the tools and the facts to negotiate.
When it applies
Use it if your report placed either practice in the lowest two stages.
| Practice | Where it may sit today | Where this move guide aims |
|---|---|---|
| What the sales team is paid on | Lagging: "Volume or gross sales, so every dollar of trade spend that moves a case is rational for the rep." Basic: "Gross sales, with a gesture toward margin." |
Competent: "Net sales or margin carry real weight, commissions are capped, and behaviour (forecast accuracy, execution) is scored." |
| Whether the people who touch pricing know how, and learn | Lagging: "The account manager learned pricing from the buyer." Basic: "A negotiation course once, and no tools." |
Competent: "Account managers have a deal calculator, a profit model with fixed parameters, and training in selling on value and negotiating on facts." |
What to do
- Read the sales incentive plan. Find every place where trade spend that moves a case raises an account manager's pay.
- At the next plan cycle, give net sales or margin real weight. Cap the commission, and add one behaviour the account managers can influence, such as forecast accuracy.
- Give account managers a deal calculator and a profit model with fixed parameters.
- Run one day of training on selling value and negotiating on facts.
- Start one shared file of account fact bases. Refresh it each terms round.
- Put the terms rounds on the yearly calendar. Table C below does this. Retake the check after twelve months.
The two free worksheets do the recording:
- /worksheets/pricing-consumer-trade/sales-incentive-alignment for the plan, the cap and the test on last year;
- /worksheets/pricing-consumer-trade/capability-and-knowledge for the calculator, the training and the shared file.
What to produce
Table C. The yearly trade calendar
| Month | Terms rounds | Price increase window | Promotion calendar locked | Budget set | Training | Owner |
|---|---|---|---|---|---|---|
A worked example
Illustrative. Written for this move guide. It describes no client.
A household cleaning brand sells through grocery, hardware and a national distributor.
- Account managers were paid on gross sales, so every dollar of trade spend that moved a case raised their bonus.
- At the next plan cycle, half the bonus moved to net sales after trade spend, with a cap and a forecast accuracy measure.
- Each account manager got a deal calculator with fixed parameters for cost, freight and promotion uplift.
- A shared file held each account's fact base, and it was refreshed before every terms round.
On a retake, both practices could be answered at the middle stage.
Effort and dependencies
- Who. The chief executive and HR change the plan. The commercial manager builds the calculator and runs the training.
- What you need. The current incentive plan, last year's results by account manager, and the cost and freight parameters.
- How long. The plan changes at the next cycle. The training and the calculator take a quarter.
- What gets in the way. A plan that pays on volume while the terms round asks for discipline. Change the plan first.
What we have seen. "Two years after a trade-spend review in one business we worked with, we went back and counted what had actually been booked: about A$9.8m of the roughly A$19m identified. One region had banked nearly all of its share; another had done nothing. Discounts and rebates in that business were running at 23% of gross sales revenue when we started." We have seen this in our own work. It is not a forecast for yours.
How will you know it worked?
| Practice | You can answer Competent when | A document alone does not count if |
|---|---|---|
| What the sales team is paid on | Net sales or margin carry real weight in the plan, commissions are capped, and behaviour is scored. | Margin is in the plan, but a deal won with trade spend still pays the most. |
| Whether the people who touch pricing know how, and learn | Account managers have a deal calculator, a profit model with fixed parameters, and training in selling on value and negotiating on facts. | The calculator exists, but account managers still work from the buyer's numbers. |
The worked examples are illustrative.
Think we've used your work without proper credit? Tell us and we'll fix it.