Strategic Pricing and Profitability: A Conversation with Jill Campen
Pricing goods and services may seem a rational, well-thought-out formula driven by market demand and savvy analysis. However, all too often, it’s more like a wet finger stuck in the air to determine which way the wind is blowing. That’s why the time my Vistage members and I recently spent with Jill Campen from Boost was so enlightening and useful.
Jill brings sanity, strategy, and years of pricing experience to the table. She impels us to ask the difficult but essential questions that we should have dug into years ago. Questions like:
- Does your organization have a pricing strategy?
- Do you understand the effect discounts have upon your profitability?
- Is there really a volume threat?
- What effect would a 1 percent pricing change have on your profitability?
- Do you use value-based messaging?
- Do you feel that the customer has all of the power, and you have none? Why?
Following our workshops, Jill and I sat down to discuss her work. I asked her what the one thing is that she wishes everyone knew about the impact of pricing upon their business. Check out our video to find out how she answered. Regardless of what you choose to do with your pricing, please remember to never accept less than you’re worth.
Got a question about your organization’s embedded assumptions—including those about pricing? Give me a call! I’m always ready to chat about interesting problems and creative solutions.
TRANSCRIPT
Chad Harvey (00:04): Hey everybody. Chad Harvey here with Jill Campen from Boost Profits. I had the great fortune to work with Jill three times the other week with different Vistage groups. Jill is an expert in pricing and profitability. She brings over 25 years of experience in both sales and leadership focus, and she helps organizations maximize their effectiveness. It was a true pleasure to work with her. Everybody got really good information and I’m going to try and give you some information here today from Jill.
Chad Harvey (00:33): Jill, what is the one thing that you wish everyone knew about the impact of pricing upon their business?
Jill Campen (00:41): Yeah, thank you so much for that, Chad. I will repeat what you said, it was a pleasure working with you and your groups. With regard to pricing, the one thing I wish people realized was the impact that pricing has on the bottom line of your business. Really, we like to talk about pricing as a pulley effect for your business. If you think about the engineering of how a pulley works, a small person can move a very large object because of the dynamics of that pulley, and pricing is the same thing for your business.
Jill Campen (01:17): So if you think about small changes in pricing, 1%, 2%, 5%, many people just discount that as, “Oh, it’s not a big deal. It’s a 1% discount, 2% discount,” but pricing is a game of fractions. So if you think about it, if you’re a 5% net profit company and you increase your prices by 1%, that results in a 20% overall increase in your profits. So when people say it’s just 1%, I say, “No, no, no, no, it’s not, it’s more like 20% or 40%.” So, really think about how you can use pricing in the positive and hopefully not the negative way of impacting your business.
Chad Harvey (02:04): That’s fantastic advice, Jill. It struck me as you were talking there, that that is the key for a lot of critical business decisions and changes too, in that so many people want to swing really big for the fences. They’ve got these big ideas, these big goals, but it’s these small incremental tweaks, like you said, that have this pulley effect that produce the greatest results.
Jill Campen (02:25): Yeah. Yeah, so just remember, we think, “Oh, we’ll make it up in volume, we’ll make it up in volume.” I hear that so much. Do the math, because the volume that you have to get to make up for some of the discounts that you may be giving is way more significant than if you just did a little pulley effect on the price increase in the products and services.
Chad Harvey (02:48): Very good. Well, I’ve got this perfect image of a little guy with a little rope and pulley set right now tweaking profits and profitability. So thank you for that, and thank you very much for your time today.
Jill Campen (02:59): Absolutely. Thank you, Chad.
Chad Harvey (03:00): All right. Thank you, Jill.