Pricing challenges diagnostic
Pillar 1 of 5
0 of 20 answered
Price Waterfall Visibility
Whether you can see list, invoice, pocket price and pocket margin on a deal.
The McKinsey price waterfall traces how value falls from list to invoice to pocket price to pocket margin. Most companies manage the invoice. The rest of the drop happens in rebates, freight, terms and cost-to-serve — and leadership often cannot name the size of it.
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Discount Governance & Controls
Who can give away price, and whether anyone checks afterwards.
Uncontrolled discounting is the largest on-invoice leak in B2B. Guidelines that live in a deck and die on the sales floor are not governance. Governance is a threshold, a route, and a review of what actually happened.
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Off-Invoice Leakage Management
Whether rebates, freight, terms and promotions are in one view.
Off-invoice items are often the hidden majority of the drop from list to pocket. They sit in finance, logistics and marketing, and they rarely meet in one number before the deal is closed.
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Contract Lifecycle & Compliance
Whether expired or unexplained terms are still being honored.
Revenue leaks when contracted terms are not enforced, when agreements auto-renew at last decade’s rate, or when a long-tail customer still has a price nobody can explain. Manufacturing and distribution books are full of these fossils.
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Quote-to-Cash Velocity
Whether a customer gets a number they can act on in hours, or waits out the week.
In B2B, time-to-quote is a competitive fact. While the deal sits in a queue, the customer is sitting with someone else. A week-long quote is not diligence. It is a transfer of the conversation.
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Approval Architecture & Decision Rights
Who can approve what, and whether senior time is spent on routine deals.
Too many layers and the deal stalls. Too few guardrails and margin erodes. The useful design is a matrix: deal size, discount depth, who decides, how long they have. Everything else is a meeting.
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Exception Rate & Root-Cause Analysis
Whether an override is a rare event or the actual process.
Every exception is a vote that the standard rule does not match the market — or that the field does not trust it. A high rate is not an efficiency problem. It is a design problem wearing a workaround.
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Channel & Segment Price Consistency
Whether the same customer can buy the same SKU at two prices.
When channels disagree, customers arbitrage. When similar customers in a segment get wildly different prices, you have given away the segment’s ceiling and trained the book to ask.
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Value-Based Pricing Capability
Whether price is tied to quantified customer value, or to cost-plus.
Cost-plus is simple and easy to defend in a meeting. It is also how you charge every customer as if they received the same thing. Value-based pricing starts when willingness to pay is a number, not a story from the last lost deal.
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Market & Competitive Responsiveness
Whether price moves in days after a cost or competitor change, or after the contract is already gone.
Most B2B books are priced annually and updated when a contract is already lost. In a volatile input market that lag is the leakage. Responsiveness is a playbook and a clock, not a task force.
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Customer Segmentation Sophistication
Whether the segment is more than a volume letter.
A/B/C volume tiers are a start. They ignore cost-to-serve, willingness to pay, growth and behaviour. Differentiated pricing on a crude tier is just a volume discount with better stationery.
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Portfolio & Lifecycle Price Strategy
Whether products are priced as a system, or one SKU at a time.
Bundles, good/better/best, lifecycle and attach-rate pricing change share of wallet. Pricing each SKU as if the others did not exist is how products compete with each other inside the same quote.
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Sales & Finance Alignment
Whether “win the deal” and “keep the margin” share a scorecard.
The tension is the job. When sales and finance are not aligned, every deal is negotiated twice — once with the customer and once internally. Shared KPIs are how that second negotiation ends.
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Pricing Authority & Governance Clarity
Who may set a price, who may break it, and what happens when they do.
Governance is not bureaucracy. It is the operating system: who sets, who exceptions, where the wall is, and what a breach produces. Without that, the loudest person in the room is the pricing function.
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Change Readiness & Transformation Appetite
Whether a pricing change is adopted, or filed under “we tried this before.”
The best design fails if the organization will not adopt it. “We tried this before” is data. It belongs in the plan, not in a surprise six weeks after kickoff. Buying the next tool will not create appetite that is not there.
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Pricing Team & Capability Investment
Whether pricing is a job, or a task that sits between three functions.
Pricing is often an orphan — shared by sales, finance and product, owned by none. A dedicated mandate, even a small one, is what turns a set of meetings into a capability. A job description nobody can find is not a role.
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Pricing Data Quality & Integration
Whether ERP, CRM and the pricing path agree on the object being priced.
Data readiness is the most common reason a pricing programme slips. Wrong identifiers, stale cost and three versions of the customer do not get better when you put them in a platform. They get faster.
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Analytical & Reporting Maturity
Whether you can see what happened — and what to do next — without a ticket.
Most companies can say what happened last month. Diagnostic (why), predictive (what next) and prescriptive (what to do) analytics are rarer. A waterfall you can only rebuild in a spreadsheet is a report, not a capability.
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Customer Profitability Visibility
Whether you know which customers make money once cost-to-serve is in.
Volume is a poor proxy for profit. Cost-to-serve varies wildly. Without customer-level pocket margin, pricing rewards the loudest account and starves the quiet one that actually pays.
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Price Elasticity & Willingness-to-Pay Intelligence
Whether anyone has measured how demand moves when price moves.
Elasticity is the foundation of scientific pricing. Most B2B teams substitute a sales anecdote. “Customers are very price-sensitive” is a hypothesis. It is not a coefficient. Win/loss without a price field is a memory contest.
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