PRICING POLICY

Definition

Pricing policy is the structured set of rules and principles that guide a company’s pricing decisions. It goes beyond simply setting a price: it outlines strategic objectives (margin, volume, price-image, market share), pricing methods (cost-based, value-based, competitive), rules for balancing conflicting objectives, validation processes, and performance metrics. Without a formalized pricing policy, pricing decisions become erratic.

Why it's important

• Provide a common framework for all teams that influence or are affected by pricing decisions (sales, marketing, procurement, finance).
• Ensuring consistency over time: despite staff turnover, the policy outlasts the people who implemented it.
• Speeding up decision-making: A clear framework makes it possible to quickly resolve standard trade-offs and focus attention on truly exceptional cases.

A concrete example

Une enseigne de bricolage formalise sa politique de prix après plusieurs années de décisions ad hoc. Le document de 12 pages définit : un positionnement cible (compétitif sur les KVI, valeur ajoutée sur le reste), des règles d'écart concurrentiel (alignement strict sur les KVI, écart toléré jusqu'à +5 % sur les autres références), une marge plancher par catégorie (entre 18 % et 35 %), un processus de validation (ajustements <5 % automatiques, >5 % en comité). Six mois après, le temps consacré aux arbitrages quotidiens a baissé de 40 %.

How to measure/use it

Developing an operational pricing policy involves four steps: an assessment of the current situation (current positioning, gaps between theory and practice), collaborative development with the relevant departments (sales, marketing, finance, procurement), drafting a concise and actionable document (the document should be readable and understandable within an hour), and supported implementation (training, communication, integration into systems). Analytics tools enable the standardized implementation of the policy.

Common Mistakes

• Drafting a policy that is too abstract: one that provides no practical, actionable guidelines.
• Building Without Field Teams: What Makes Adoption Difficult.
• Do not update: A static document becomes obsolete within 18 to 24 months due to market changes.

Learn more

• Research & Data: Price analysis to objectively assess the starting point before drafting.
• Solutions: Pricing Analytics to streamline policy implementation.
• Tip: Developing a pricing strategy that leads to a formalized policy.
• Resources: See our pricing FAQ for information on what to include in a pricing policy.

Mini FAQ

How long should a pricing policy be?

In most cases, between 10 and 25 pages. If it’s shorter than that, it remains too general. If it’s longer, the document becomes unreadable and is no longer used. The goal is for a newcomer to be able to understand the policy in an hour of reading.

Who is responsible for approving the pricing policy?

The executive committee or senior management, following joint development with the sales, finance, marketing, and procurement departments. Without approval at the highest level, the policy lacks the authority to prevail in decision-making.

How often should it be reviewed?

A comprehensive review every 18 to 24 months, with annual partial updates. Any major development (acquisition, change in positioning, crisis) calls for a special review.