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Yield Stories Get Price Up · The Yield Doctor with James Deaker

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  hi I'm James Deaker the yield  doctor and this is yield stories
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  These are quick real-world  anecdotes that unpack some  
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  of the core lessons from good  pricing and yield management
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  This one is about the time that I was told  to get price up And yeah it wasn't so much  
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  a suggestion as it was a command I was  the head of pricing at a large website  
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  and our CEO thought that the price on one of  our main products was way too low And so I  
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  was given a very direct mission Get price  up and get it up fast It was considered  
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  so important that my annual goals were  tied to it and my bonus was tied to it
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  And to be even more specific it was tied to  increasing the price realization on this product  
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  Now at first glance this may seem  totally reasonable right i mean  
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  pricing leader get prices up sounds  reasonable But I paused and thought  
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  about it and then went back to my manager  and I said "I can do it but you might not  
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  like how I do it and it might not  be the right thing for the company."
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  But they reiterated that the goal was the  goal and just go execute and hit that goal  
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  As the head of pricing I had a number of  levers at my disposal I had the rate card  
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  I had floor prices I had deal approvals So  all those levers I pulled them all I raised  
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  the rates I pushed up the floors I started  rejecting low-priced deals even strategic  
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  deals that might have been in the long-term  interest of the company Deals that I might  
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  have approved before rejected shut them all  down And guess what happened prices went up
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  Of course they did I had an iron grip on the  controls They had no choice but to go up But  
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  what else happened demand went down and not just  a little bit but faster than the increases in  
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  price So instead of making more money than we  expected we were actually making less Revenue  
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  started to drop below the forecast And yeah  that was a fun conversation to have with my  
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  boss because technically I did what I was asked  I was hitting the goals as they were outlined
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  But in my heart of hearts I knew it was  wrong However I felt that the only way  
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  to make my point and to put a spotlight  on the fact that the goal was not the  
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  right goal was to move quickly to  try to achieve it And sure enough  
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  uh the goals were all reset and we  quickly ended up with the right goal
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  So what is the takeaway here if the  goal is just get price up you might  
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  be missing the bigger picture The real  goal at least in this case should have  
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  been something like optimize pricing to  increase the revenue Thanks for watching  
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  If you are setting pricing goals or trying to  hit them make sure that you are aiming at the  
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  right target I'm James Deaker The Yield  Doctor See you next time on Yield Stories