Identifying traits connected to the four main stages of price management maturity will help you advance to the next level
What’s your pricing management maturity level? According to Gartner, 91% of organizations haven’t yet reached “transformational maturity” in exploiting their data and analytics. So, if you’re one of these, you have plenty of company.
The ability to exploit pricing data for Life Sciences companies today is an evolutionary process. Examining sales spreadsheets and updating pricing data on a quarterly basis is a great start. But it’s important for companies to identify the distinct stages in price management maturity, each of which moves a company closer to a model-driven price management environment.
At Vistex, we’ve found that it takes about 4 years for Life Sciences companies to achieve price management maturity. Here are the stages:
- Stage 1: Basic Price Management – Companies have basic governance, which may include a limited-to-no-pricing strategy. Many companies are still using Excel as a tool. If organizations are using any analytics, they are likely from a spreadsheet with no follow-up or strategic analytics.
- Stage 2: Pricing Management – Pricing strategies are limited to pricing floors, margins, and targets. Not all managers have visibility and ability to meet local needs. Again, they’re likely using Excel for analysis, but looking backward, not forward.
- Stage 3: Strategy Management – There is a pricing strategy that has been defined beyond just prices, for example,
Here’s the rebate processes I’m going to offer, and here’s why.At this stage, the pricing strategy can be more global, controlled, and impactful. And people have a shared understanding across the organization.
- Stage 4: Model-Driven Management – This stage is aspirational, because it fuels EBITDA performance. Here, the company has defined models – it knows the impact of certain decisions before it makes those recommendations. The model-driven decisions are made before providing that goal to the marketplace, saving money by not giving away too much revenue upfront.
So, do you know where you are within the price management maturity lifecycle? Or, what stage you are in and how can you progress to
transformational maturity? Download this eBook, 4 Steps in the Life Sciences Price Management Maturity Model: Where Are You? You’ll learn how to step up and make sure it all adds up.