As a CIO, your job is to make sure that the company’s IT systems are up and running at all times, right? You really don’t play a role in what the company does to make money – after all, you’re in charge of a cost center. Well, that’s the way that things might have been back in the day; however, now that we’re living in the era of Big Data, that has all changed. Now CIOs are more and more often playing a role when it comes to determining what price the company is going to charge for its products…
What Makes A Price “Right”?
One of the biggest challenges that CIOs face when it comes to pricing is trying to determine just exactly what price is going to be “right” for their company’s customers. Sure, there’s a price that the company wants to sell the product at; however, that price could be either too high or too low for your prospective customers.
What a CIO needs to do is some homework. What you are going to be looking for is a price that is both fair to your customers (they get to decide this) while at the same time generating a reasonable profit for your company. This may seem simple to understand; however, it can be tricky to get right.
The good news is that the IT department probably already has all of the data that you need in order to determine what this price is. The company has used different prices for your products in the past and you have the sales data that that price generated. With just a bit of analytical software and some sharp IT staff, you can determine what set of prices your company’s customers are going to be willing to live with.
It’s All About The “Human Factor”
I think that taking the time to perform analytics on your stored data is a great idea. However, CIOs need to keep in mind that the answers that pop out of such an analysis may not be the right answers. There is always the “human factor” that needs to be considered.
Other CIOs have run into problems along the way when they’ve just done what their IT department’s pricing research told them to do. Cases of this include a soft drink company which got into trouble when they announced a program to raise vending machine prices as the weather got warmer and an energy company who started to charge more for energy when consumers crossed over a threshold.
What this all comes down to is the simple lesson that a CIO’s judgment still matters. As much as is possible, CIOs want to work with the other departments who go out into the field and spend time with their customers. What you need to be looking for is the data that they bring about how customers are behaving and why they are making the product decisions that they are making. It’s only by understanding these factors that you’ll be able to configure the IT systems to pick the right price to charge them for your company’s products.
What All Of This Means For You
Helping to get the price of your company’s product correct is one of the most important jobs that a CIO can do. However, exactly how to pick the right price is something that can appear to be more of an art than a science at times.
CIOs need to take the time to discover just how elastic the price for their company’s type of product can be. Prices are not fixed – the IT department will need to create a plan to raise your prices over time. You also have to account for the human factor and understand how your customers are going to perceive your prices.
Let’s face it – pricing a product correctly is not an easy task to do. However, it is well worth the effort that goes into it because if you get it right, you can boost your company’s products chances of generating a profit. Take the time to figure out how the IT department can contribute to selecting a good 21st Century price and you’ll have set the stage for your company’s product to be a success
Question For You: How often do you think that the IT department should be called in to change your company’s product price?
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What We’ll Be Talking About Next Time
As the person who has the CIO job, you’d like to think that you have things under control That when the rest of the company has an IT need they’ll come to you, ask your permission to do something, and then live with whatever you tell them. The reality is a bit different. If you tell someone that they can’t do something related to technology, all too often you’ll be contributing to building a “shadow IT” department in your company that you don’t have any control over. Sure sounds like you’ve got to find out what’s going on here…