How to Choose a Pricing Consultant

Choose a pricing consultant on four tests: what you hold at the end, who does the work, how the benefit is measured, and who keeps the capability afterwards. Day rates and the logo on the proposal come after those. Pricing Insight sells pricing consulting, so read this knowing that. The tests apply to any firm, including us.

In-house pricing team or consultant: which fits?

Build in-house when pricing decisions come up every week and one named role has authority over price lists, discount approvals and exceptions. A consultant fits when the work is a defined piece done once, or when the answer needs an outside view because people inside the business have a stake in it.

• A consultant fits when you need a diagnostic of where margin is conceded, a price file rebuilt, or discount rules written and agreed.
• An in-house team fits when the job is running those rules month after month, answering sales on exceptions and keeping the data current.
• Most businesses need both in sequence: the consultant sets the baseline and the rules, and your team runs them.

One check decides it. If you cannot name who will own the output on the day the consultant leaves, fix that before you hire anyone.

Boutique pricing consultancy or large consulting firm?

The difference that matters is who does the work and how the scope is set. Size alone does not tell you which will serve you better. Ask each firm the same four things:

• Who will be in the room each week, by name?
• Is the person who sells the work the person who does it?
• Is pricing a main line of work for the firm or one of many?
• How many people sit between you and the analysis?

A large firm may suit a project that runs across pricing, operations, systems and finance and needs a program office to coordinate it. A boutique may suit a question that is about pricing alone, where you want senior people doing the analysis. Treat both as fits for particular jobs and test each one against references.

What should you ask any consultant before you sign?

1. What do we hold at the end? Ask for the deliverables as files and rules you can use, such as price files, discount rules and approval limits. A report of recommendations is not the same thing.
2. Who does the work? Get names, roles and the days each person will give to your project each week.
3. How is the benefit measured? Ask who sets the baseline and whether your Finance team signs it before work starts. Without a signed baseline nobody can check a claimed uplift.
4. How is the fee set? Fixed, time-based or tied to the outcome? Ask what you pay if the outcome is zero and what the fee excludes.
5. What do you need from us? Ask for the data, system access and hours from sales and finance, so the cost to your own team is on the table.
6. Who takes the changes to customers? Price changes produce calls from customers. Ask who handles them and what support your sales team gets.
7. What do you not cover? Ask for the exclusions in writing.
8. What do we keep when you leave? Models, documentation and training for the people who will run it.
9. Can we speak to a client in a similar position? Ask for one reference and ask what did not go to plan.

How do you check the answers?

Put the same questions to two or three firms in writing and compare the answers side by side. Vague answers on measurement and on exclusions tell you most about how the engagement will run.

When you call references, speak to someone in Finance as well as the sponsor. Ask whether the price changes reached the invoice and whether the benefit was measured against the agreed baseline. Ask each firm for a previous deliverable with the client's name removed, so you can see what you would receive.

How does Pricing Insight answer these questions?

Our 9PE Pricing Diagnostic and Quick Wins is an 8 to 12-week review of how your business sets and realises price. It scores nine elements of pricing capability from a staff survey, tests them against interviews and your sales data, and returns a traffic light, a maturity level and a target for each element, with a sequenced plan. The first actions start in month one. Ron Wood founded the firm.

The same four tests apply to us. To see how a pricing benefit gets sized, read How to Size a Margin Uplift from Pricing.

Next step

Take the nine questions above to the firms on your shortlist. If you want our answers to them, book a diagnostic scoping call and ask us the same questions.