In order for your company to be successful, they need to sell their product or service to the right customer at the right price. It turns out that this may be more difficult than you think. Here in the 21st Century, determining what the right price for a product is requires a great deal of support from the IT department and is just one more example of the importance of information technology. Is your IT department ready to lend a helping hand when it comes to pricing?
The Problem With Pricing
It turns out that setting the right price for its products is one of the hardest tasks that any company has to do. If they set them too high, nobody will buy the products, if they set them too low, then they won’t make any money when people do buy the products.
More often than not the #1 problem that a company has with its pricing is that the people running the show (like you) don’t do a good job of creating a consistent and detailed pricing strategy. The company’s prices change all the time and your customers never understand why they go up or why they go down.
This is something that can happen all too easily when pricing decisions are left to lower level employees. What needs to happen is that control over something as important as pricing needs to take place at a higher level in the company and you, as the person with the CIO job, need to play a role.
How IT Can Help With Pricing
It can be all too easy to ask the IT team to “run the numbers” when it’s time to update the company’s pricing strategy. It turns out that the IT team can do a lot more than that if only the rest of the company knows how to ask for their help:
Profit Analysis: Not all products are created the same. Some generate more profit for the company than other products do. The trick is being able to sift through all of the data about what it takes to create, store, and ship a product in order to get to the bottom of how much the company is making each time one of them gets sold. This is a job that was virtually made for IT to help out with.
Scenarios: Different situations and different types of customers call for different pricing strategies. Identifying when a new pricing strategy would result in improved sales and then creating the strategy is a job that IT needs to be involved in.
Teams: creating an effective pricing strategy is something that is best done by a team of experts that represent different parts of the company. Every one of these teams needs to have a member of the IT department on it in order to make sure that IT fully understands what the team needs to have done – and when it’s due!
Picking: selecting the right price involves a lot of math. What you’ll be trying to do is to pick the price point that maximizes profit – not sales. As the different variables that need to be considered are taken into account, the IT team will have the tools that will be needed to show the impact of each decision.
Communicate: once a price strategy has been agreed on, the IT department can help the rest of the company clearly communicate the strategy to the company’s customers. The Internet, social media, and the company’s web site should all be used to do this.
What All Of This Means For You
In order for any company to be successful, they need to learn how to set the correct prices for their products. This is a challenging task that has to take into account a large number of variables and requires help from the person in the CIO position. In order to help your company get its pricing right, the IT department can play a role.
As the CIO you need to help to solve the company’s main pricing problem: you need to have a clear and consistent pricing program. In order to help make this happen the IT department can help with analyzing where the company makes it money, developing different pricing scenarios, participating in pricing teams, and helping to create a consistent strategy.
The reason that your company exists is to make money and the reason that it has an IT department is to help it to make more money. Creating prices that cause customers to buy the company’s products is a fundamental task that the IT department can help the company out with. Make this one of your CIO duties and you can join in the celebration of the company’s success!
Question For You: Do you think that the IT department should play a role in determining if a company’s pricing program is being successful?
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What We’ll Be Talking About Next Time
Just exactly how does an IT manager become a CIO? Is there some sort of magic wand involved in the process a la Harry Potter? Is there a secret book that gets opened and words of wisdom are handed down that allow the manager to finally fully understand the importance of information technology? Unfortunately not. All too often talented IT managers find themselves being thrust into the role of CIO with precious little training and almost no support network. They know that they need to change and grow into the role, but how?