Customer Reviews

Six Sigma Pricing: Improving Pricing Operations to Increase Profits

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Of all the books on pricing, very few are written for the pricing professional. When they are, often the discussion centers on a strategy, tactic or analytic technique and what it means for profitability or revenue. At the end of the day, all these ideas, frameworks and techniques must degenerate into action. Someone has to do something. However, most books remain mute on the details of getting work done - all except Six Sigma Pricing. This book is a gem!

Six Sigma Pricing provides a roadmap to improving the realized price of products to anyone concerned with managing and implementing pricing in an organization. Drawing on the techniques of Six Sigma, the authors (one a practitioner the other an academic) focus on pricing operations - the boiler room where all the pricing details are sweated out and the work gets done in an organization.

In Section I of the book, Motivation and Context, the reader gets some background on how pricing and six sigma are related. Section II, Basics - Pricing Operations and Six Sigma, deals with the relationship between six sigma and pricing operations. Section III, Doing a Six Sigma Project, is self explanatory but is unique in its use of a single case study throughout. Section IV deals with the ins and outs of an enterprisewide deployment of a Six Sigma project.

Overall, I think this book is a useful addition to a pricing professional's library. It provides encouragement when there is doubt that any change will occur. It provides a map including road signs and danger signs. But most of all, it tells you that pricing operations can be improved and how.

If your company negotiates prices, you need to read this book. The authors provide a welcome operational complement to the much broader literature on pricing theory. Pricing theory typically focuses on what price to set, and what policies to consider. This book focuses on how to execute those policies effectively, without the "defects" that sap profitability. Using a Six Sigma framework, the book identifies defects, or "sloppy pricing" in both prices per se, and pricing processes. Prices can be defective if they are too low, leaving money on the table, or too high, reducing purchases and leading to customer attrition. Processes can be defective if they do not meet defined service level agreements for turning around price approval requests (or if there is no defined service level). Eliminating or reducing these defects can lead to substantial profit gains, just as earlier Six Sigma efforts did with manufacturing defects.

The book comes in four parts, the "Motivation and Context," "Basics--Pricing Operations and Six Sigma," "Doing a Six Sigma Pricing Project," and "Enterprisewide Deployment." Throughout, the authors use an anonymized case study, based on their personal experience, to explicate the concepts in the book. For people familiar with the challenges described in the book, the first two parts will be a refresher, and the real interest will lie with the second half of the book. For executives and others who are not familiar with the concepts, the first half will be illuminating, while the second half may contain too much detail. Project managers and pricing wonks will want to cover the whole book.

So what if your company does not have expertise with Six Sigma? This is my only real problem with the book--not that you can't use the concepts, but that the title implies that the book applies primarily to Six Sigma junkies. Sodhi and Sodhi provide templates, common opportunities, and suggestions for managing scope to achieve not just conceptual improvements, but real-life, measurable benefit. There is enough information here to guide novices through the process, although you might want to consult with an expert. The authors also emphasize that Six Sigma is one possible methodology to improve pricing operations, and the one that the authors have direct experience practicing, but it is not the only road. One benefit of going with Six Sigma, however, is that it provides a framework for collaboration between different parts of the company.

This book will not help you set list prices, or build a pricing practice, but it will help you build a pricing project team, and get much more benefit from your current pricing organization. For companies that have a multi-step pricing process, especially one that involves sales negotiations, this will be one of the most valuable books you will read this year.

Pricing, getting it "right" and positioning a company with a cohesive plan to address this critical process is always a challenge. While some may think of Six Sigma as a cold, clinical tool (which it can be), the authors get it right with Six Sigma Pricing. From my perspective, the volatile economic environment in which we find ourselves operating today, with the Euro surging past US$1.55, profit margins can dissipate more quickly than one can imagine if you are not on top of your game. The authors couple Six Sigma processes and good business sense with proven processes to help companies manage this critical process. Very well done.

As an academic, I have been searching for a good book, which can be used in Business School classes to introduce students to pricing operations as a marketing topic and also Six Sigma for process improvement. It is one of a few books available, which is serious enough to be used as a text book but also full of real-life and relevant industry examples. Sometimes, I feel really uncomfortable to hear from students discussing Six Sigma, who obviously had read jargon filled Six Sigma books with little substance. This book is an exception, since it presents Six Sigma and pricing concepts clearly and in an applied context.

Pricing is a hot topic. This book is special: it covers the process of pricing in great detail and outlines some of the pitfalls of traditional pricing processes. In addition, it adds a special angle to the topic: seeing pricing as a (tactical) process, where Six Sigma tools can and should be applied to improve consistency, scalability, and performance. After taking you through each step - Define, Measure, Analyze, Improve, Control - you will be able to apply Six Sigma rigor to the topic of pricing, no matter whether you already have Six Sigma experience in other areas (operations) and regardless of how far you are already in implementing advanced pricing methods. An excellent read and a highly needed practical perspective on the process of pricing.

The authors admit early in the book that they've taken on a very challenging task: to provide readers a way to bring what might be the most unwieldly and convoluted corporate process - the "pricing process" - under some semblance of control. To a large degree, they succeed. They do a wonderful job of using Six Sigma as a means to make this challenge manageable, without letting Six Sigma gain the upper hand. In other words, this is a very useful and practical book about removing defects from your decision-making process on pricing. It's not a book which treats pricing as just more grist for the Six Sigma mill. This book is definitely worth reading if you feel your company's pricing process needs more discipline, rigor, and structure.

Developing a pricing strategy is easy, it's execution that's difficult. With a lot of conflicting interests and stakeholders, variation in the execution (pricing processes) can be costly. Unfortunately, ensuring price execution in adherence with your price strategy is often difficult. Six sigma pricing can really help to ensure effective adherence to contract terms or price guidelines. Working fact based is a huge benefit in a subject as pricing. I recommend this book if you are looking where and how to start improving your pricing processes !

Pol Vanaerde - president European Pricing Platform - www.pricingplatform.eu

This book will be very valuable to you if you are interested in pricing processes and deviations/lost value that can happen due to the fact that these (pricing processes) are quite often "dirty". How to standardize and control your "actual" prices to match as close as possible your "list" prices is a main thought of this book. I liked it pretty much, it surely put some different light onto my pricing/process thoughts. I recommend it to pricing/marketing and sales professionals working in mid-large organizations and managing complex price lists (more than 100 current prices at all times).

Alright, so this book has the appeal of two of the most complex business processes viz. pricing and six sigma. The book works very well at a high level overview. It has a few good case studies that describe "qualitatively" the process undertaken by an organization to merge the six sigma process with pricing process. And thats the key word ... "qualitative". Pricing and six sigma are very "quantitative" and "analytical" in nature. And thats where the book suffers. There is not enough in there for the analytical folks. In any case, it is a good read for the process minded, and I recommend it.

Six Sigma Pricing: Improving Pricing Operations to Increase Profits (Six Sigma)

I would recommend this book to any executive looking to gain a better understanding of pricing, the pricing process, and the dynamics involved in bringing better pricing precision to your organization.

As a C-suite executive in a $1B food manufacturing company, while I have no pricing/procurement responsibilities, I am directly involved in Strategy and strategic planning for our organization; and in the current marketplace of rising commodity costs with questionable price elasticity, maximizing profits for us requires a thorough understanding of price.

This book helped me better understand and participate in the strategic discussions with my other business partners.