Pricing

The Chess Game of Profitability

By Ben Blaney
April 10, 2012

How many of the readers of this blog are chess players, I wonder? I am a capable player, though I don’t get a game all that often – despite a set being fairly prominent in my home.
Chess But in pricing, we have so many more players in the game. If we make a given pricing move, and we have three competitors, we need to think through what each of them might do in reaction. And we need to think about what our customers might do.The game of chess lends itself brilliantly to analogies in many areas of life – international relations in the political sphere immediately springs to mind – but in the business world, I think it is particularly helpful in the pricing area.

Making a rational decision to commission a lean six sigma improvement project to remove deviation and errors from a factory is pretty straightforward with a cost-benefit analysis, a net-present value calculation and a gantt chart. Hiring the best candidate for an open requisition – again, beyond the critical analysis of the candidate relative to the role, that’s a linear thought process.

Even if we take the mathematically significant few – both in revenue and in profitability – then we have a chess game of quite some complexity. I like to think of it as a chess board arranged in a decagon rather than a square.

 

In B2B organizations, then, we ought to tirelessly strive to populate our pricing departments with the best and the brightest, and to equip them with the very best tools with which to analyze and monitor the result of each move. Let’s support the strategists and the statisticians – supported by the best competitive intelligence available from our sales and marketing teams.

And back to chess… well, I can’t promise to be the most challenging opponent ever, but feel to stop by my house for a game of chess in the library. Don’t be surprised to see the Sicilian Defense – in fact, you can count on it.

– Ben Blaney

  • Price Management , Pricing Optimization , pricing software , segmentation

    Ben Blaney

    Ben has 10 years experience in the pricing space, managing people, processes, and projects, delivering operating income improvements in excess of $50MM. He leads Commercial Excellence at a division of Colfax Corporation. Prior to that, Ben led pricing for a division of General Electric, worked at Vendavo, and ITT Corporation. He is a Certified Pricing Professional, a Six Sigma Black Belt, and holds both major project management certifications (PMP and PRINCE2).