Case Study: What Butters The Bread
I worked with a company whose pricing tool was developed to be a mirror image of its timesheet system. The number of units in a typical budget were multiple times higher than most other companies in its industry, because a discrete pricing unit was required for every combination of task, role, and region. The pricing team and prospective customers alike drowned in the level of detail. Proposal deliverables always went down to the wire because of how difficult it was to simply create a budget in the pricing tool.
But- at least the finance team was happy because it was easy to set up timesheets for the ~15-20% of bids that got awarded…
We opted to completely overhaul the tool. The new pricing tool was designed to do what pricing tools are supposed to do- price services accurately and efficiently, with flexibility to customize for customer needs and competitive considerations, in a format customers will easily understand.
The company had been tinkering on its own with a new tool design for nearly a year. Less than 4 months after engaging, we had a new tool designed, built, and, most importantly, launched. The pricing team had a tool they enjoyed using, executives had a much more intuitive picture of the bid to make decisions against, and customers no longer had to get out their decoder key to review what was sent.
Your cynical side may be visualizing a bunch of people celebrating while the finance team sulks in a corner. Not true. Even though the new tool required a little extra manual effort to set up in the project finance system, the finance team was happy about the new tool because they knew it was good for the company. They also understood exactly why the new tool needed to be developed the way it was, and that one of the tradeoffs was a slightly loss of efficiency for one of their processes.
MORAL OF THE STORY: develop pricing tools that are good at pricing, so that you can win new contracts and price changes effectively. Without new and expanding business, the downstream concerns don’t really matter that much. Focus on what butters your bread.