Six Sigma Pricing: Improving Pricing Operations to Increase Profits - Hardcover

Six Sigma Pricing by Navdeep Sodhi and Manmohan Sodhi is a successful effort by all accounts. This is a Six Sigma book in the most generic sense, yet it isn't like most other subject-specific books in the Quality marketplace. The central reason I make this statement is because the authors are very systematic in laying out the content of the book and do a fine job conveying their intellectual intentions. Following an eerily regimented (read logical) approach to the subject matter, the authors successfully illustrate how business leaders in addition to MBA students can benefit from their pricing logic. The authors are very clear about the objectives of this undertaking: they state early in the book that their effort is not to be misunderstood as yet another rally in support of Six Sigma. Rather, they distinguish themselves from the multitude of authors and experts who are either waving the banner of Six Sigma or are busy condemning it as the reason for all the ills in corporate America (no comment on how one can blame a methodology - a set of statistical tools - for the foibles of corporations). To clarify, I quote from the book: When we set out to write this book, our goal was not to capitalize on the current popularity of Six Sigma, but to capitalize on the ideas behind Six Sigma that predate this methodology. These ideas will survive Six Sigma when some other methodology replaces it in popularity (pg xxi). Clearly, this book has pedagogic intent as its driving force. The authors want to impart their experience with a rather complex subject matter to corporations and business students. When pricing is the topic of discussion today, it is most often concerning strategy and the impact of external forces. It is the feeling of the authors that seldom do organizations approach pricing from an "internal" viewpoint. Having experienced the highly intense world of medical equipment pricing, I couldn't agree more with this assertion. By employing the term "internal" the authors are referring to the core processes within a company as they are bringing a product to market. To drive their point into even more relevance, the authors make this claim: the discipline employed by firms as they control the cost side of business has been lacking in large part on the revenue side. In their opinion this creates leakage from top line sales. Neither defects in the form of excessive discounts or opportunistic high prices that lead to customer dissatisfaction and eventual loss in future sales are acceptable. Rather, it is shown to the audience that implementing mechanisms (utilizing Six Sigma) that control the actions of setting and maintaining price can go a very long way in increasing long term profitability. The case made by Navdeep and Manmohan Sodhi is simple and compelling. Pricing, much like other functions withing a corporation needs to follow a systematic and data-driven path. As every company needs to show a stable and uniform face to their cusotmers, rigorous pricing of products and services is left to staff with good intentions but lacking the core knowledge and training. Six Sigma Pricing both makes the case and shows the way for appropriate managers. --Shahbaz Shahbazi, Principal, ProcessArc, Inc. (Oct. 30, 2007) There are many books about what is Six Sigma. There are some texts that explain Six Sigma applications. Most of these application examples are limited to manufacturing and services industry. Here is a recent book from Financial Times Press that talks about Six Sigma Pricing. It is an interesting reading on Six Sigma application on pricing operations to enhance profits. The book starts off with an illustration of impact of correct pricing on profitability compared to cost reduction and increase in sales volume. This is complemented by several examples of price leaks in different industry verticals. An interesting case study of the application of Six Sigma pricing at a global manufacturer of industrial equipment concludes the Part I of the book. The next part presents a process view of the pricing function. It is followed by a brief contextual introduction of Six Sigma along with various tools used during its application. In Part III, authors explain the details for applying Six Sigma Pricing. It begins with how to select a pricing project and take a deep dive in to each process step with an example. The last part covers the aspect of enterprise-wide deployment of Six Sigma pricing. Two of the takeaways from this book are really noteworthy viz. a) Improving Prices Is Better than Cutting Costs and b) Sales Is the Lifeblood, but Price Is the Oxygen. It is a must read for Sales professionals and Six Sigma practitioners who are keen to experiment with Six Sigma in some untraditional way. --Sanjaya Kumar Saxena, www.discoversixsigma.org

Apply Six Sigma to Your #1 Business Challenge: Pricing "Six Sigma is well known for having helped companies save billions of dollars. This book is the first to show us how to use it on the revenue side of the equation to generate profitable growth. This step-by-step guide will be an instant classic-a seminal book on a topic critical to profitability." -Robert Cross, Chairman and CEO, Revenue Analytics Inc. and author of Revenue Management "Six Sigma Pricing provides companies with a practical toolkit to improve their price management. The authors show executives how to use Six Sigma tools in their pricing processes and instantly improve profits and their bottom-line. This is a truly `must-have' resource for managers everywhere." -Eric Mitchell, President, Professional Pricing Society Many companies have developed solid sales strategies- but without equally good pricing operations, those strategies alone will not add a dime to the bottom line. The goal of pricing operations is to consistently control price deviations in transactions and contracts over time and across customer segments. This goal of ensuring the prices are not too low or too high in different transactions relative to guidelines lends itself perfectly to Six Sigma. Using the authors' breakthrough Six Sigma-based approach, you can systematically eliminate pricing-related revenue leaks, driving higher profits without alienating customers. You'll learn how to define pricing "defects," gather and analyze relevant pricing data, review pricing-agreement processes, identify and control failures, implement improvements, and then ensure continuous, ongoing improvement in price, profits and customer satisfaction. The book reflects the authors' pioneering experience implementing Six Sigma pricing. Whether you're a business leader, strategist, manager, consultant, or Six Sigma specialist, it will help you or your client recover profits that have been slipping through the cracks in pricing operations. *Learn why Six Sigma Pricing makes sense Why you should target pricing operations, and how to do it * Identify profit leaks from inefficient pricing operations Why "sloppy pricing" occurs, how to find it, and how to root it out * Illuminate your current pricing processes, so you can improve them Understand your market-facing and internally focused pricing processes pertaining to product launch and lifecycle price management, price increases due to escalation in costs of raw materials, promotions, and discounting * Set up your pricing operations for continuous improvement in line with your pricing and sales strategy Use Six Sigma to improve and control processes, ensuring alignment with agreed-upon strategy for pricing and sales * Create an organization that is successful at pricing Align different functions and levels of the company to achieve targeted profits