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    June 13, 2024

    The Role of the Pricing Strategist in the Age of AI

    With AI equipped to recognize patterns swiftly, will the pricing analyst soon be replaced?

    Maybe. Indeed, AI can handle many analytical tasks quickly. However, this technological advancement does not render the importance of strategic pricing decisions obsolete. The strategist's role is to generate hypotheses that explain why certain customers consistently pay more or can be served at lower costs over the lifecycle of a solution and a relationship. They seek the root cause of performance gaps and make connections between value-creation investments and value-capture activities within the  business model.

    A pricing strategist asks the questions that the analyst tries to get the data to answer.  The data scientists I have worked with, in particular, have brought incredible skills to the profession and filtered through noisy data, finding patterns and at lightning speed (take a peak at our new AI -powered profitability add-on, Horizon.

    The transaction price is simply an expression of price paid, metrics, and time, that bridges the gap between value creation and value capture.  The craft of the strategist in pricing is finding the optimal price structure where solutions consistently yield higher Customer ROI that exceeds the solutions’ Total Cost of Ownership. 

    A pricing strategist, thus, takes on a collaborative endeavor to navigate the organization effectively to support a sustainable business model.

    Examples of the Pricing Strategist at Work:

    • Working with the Product Management team to bring true innovation to market, the release price is raised 30% higher than “recommended” by Marketing and Sales after completing a Customer Benefit Analysis.
    • After conducting conjoint analysis, convinced Product Development to stop working on features that do not drive price or purchase behavior, saving $35M in the first year.
    • Helps software solution product team transform a commoditized pricing model from a volume-based price metric to a value-based pricing structure with a new release, driving 40% adoption growth over two years.

    It's all about having an agile mindset to fuel growth and ensure a steady cash flow for reinvestment. This keeps pricing robust and sustainable and incrementally improves profit performance in the long haul. We're in the business of answering precisely these questions for software-enabled solutions with the ProfitStreams™ Canvas

    Let's chat. Schedule a meeting with me.

    Tag(s): Pricing

    Kevin McCabe

    Kevin McCabe is a pioneering figure in the field of pricing consultancy, renowned for their innovative approach and unwavering commitment to driving profitability. With a rich background in fintech, manufacturing and services and extensive experience across diverse industry verticals. Kevin is a Sloan Fellow (London Business School) and has an MSc from The University of London (his Dad’s alma mater). Growing up in Canada, Kevin has traveled the world and is settled in Boston with his wife, MaryAnn, and two college-aged kids. Plus, the dog that led him to Luke.