Pricing is a complicated and often frustrating challenge for business leaders because they have so many theories, concepts, frameworks, and equations to choose from. Some leaders deal with this challenge by relying on familiar approaches, such as what their company has always done. Others delegate pricing tasks to internal teams with a superior understanding of the intricate mathematics. When they want to change or optimize these processes, they either revisit the vast smorgasbord of pricing ideas or they upgrade their analytical capabilities.
In their attempts to simplify, business leaders miss opportunities to use pricing to grow their business, improve their company’s relationships with customers, and reshape their business and their industry. The more we investigated the roots of this problem over the past two decades—through our client work and through independent research at the BCG Henderson Institute—the more we realized that business leaders needed one unified theory of pricing to inspire and guide their decision making.
We have developed that unified theory, manifested in a tool we call the Strategic Pricing Hexagon, by bringing all the disparate pricing ideas, and the drivers and forces behind them, into one master structure. This article shows how the Strategic Pricing Hexagon allows leaders to look beyond the numbers and develop a pricing strategy that can change the entire trajectory of their business and their market.