Businesses have been steadily increasing their emphasis on pricing, seeking to extract more value from their products and services. Consequently, the depth of understanding the pricing techniques and methods has evolved over time. This shift has seen a move from cost-based pricing to value-based pricing, focusing on customer and consumer price acceptance and willingness to pay. Along this journey, innovative tools have emerged that enable pricing to be segmented and targeted in ways unimagined in the 80s and 90s. 

Pricing departments have begun to establish themselves as standalone functions rather than part-time activity within Marketing, Finance, or Sales. As large corporations recognised the potential benefits of pricing flowing into their bottom line, measuring the maturity of pricing activities became increasingly important. Various models have been developed to assess and measure an organisation's pricing maturity. The majority are summarised into 4-5 maturity levels based on pricing methods, data science utilisation, and tools employed (see Figure 1). 

Figure 1: Price maturity measurements

All these factors are crucial for businesses continuously seeking to enhance value and margins. However, this article examines a different maturity scale – one that focuses on the effectiveness of technical pricing knowledge. In other words, what is the necessary maturity scale for translating technical pricing language across an organisation? The most successful companies, in terms of pricing, integrate pricing, value, and revenue management into their culture rather than treating them as individual projects or isolated departments. 

There are distinct signs and indications when a company is growing its pricing culture maturity. As a pricing professional, you can assess your organisation's stage and determine the necessary steps for progression. It is important to note that developing a mature pricing culture does not detract from the significance of pricing knowledge, data science work, or other essential models required for analysing value-generating parameters. Consider the following five levels to transform pricing from a standalone function to an integral component of daily operations, akin to learning a new language: 

Level 1: The pricing department follows instructions without contributing to decision-making – no seat at the table. 

Level 2: The pricing department participates in sales briefings and financial discussions – a small seat at the back of the room. 

Level 3: The pricing department actively contributes to strategic decisions – a seat at the table when convenient. 

Level 4: The pricing department serves as a value-adding partner across the organisation – a permanent seat at the table. 

Level 5: Pricing is deeply ingrained in the organisation's mindset and DNA. 

Level 1: Pricing is perceived as a cost centre with intelligent individuals working on complex matters, but their insights seem unrealistic and impractical. Consequently, pricing professionals are excluded from critical decision-making sessions, resulting in an "Us versus Them" mentality. 

Level 2: Business leaders begin to understand basic pricing terminology. Occasionally, pricing insights are comprehended and deemed useful, leading to the pricing leader's invitation to important meetings but without much room for input. It's the observer's small seat at the back of the boardroom. 

Level 3: This level represents a tipping point in pricing culture maturity within organisations. Business leaders grasp key pricing concepts and see the practical applications of pricing experts' recommendations. A dialogue develops between the two parties, and the positive outcomes of good pricing work become evident, increasing business leaders' interest in pricing. However, pricing's seat at the table is still conditional and often accompanied by a "be grateful you're here" attitude. 

Level 4: At this level, a comprehensive conversation about value takes place. Business leaders comfortably discuss pricing concepts and welcome new insights from the pricing leader. Pricing is considered as important as any other function, and its input is deemed essential for the collective success of the business. Pricing is perceived as an enabler rather than an inhibitor, and a sense of unity emerges with the hashtag #OneOfUs. 

Level 5: Business leaders become fluent in pricing, even to the extent of creatively incorporating it into their communication. The distinction between Pricing and Business dissolves as pricing is embedded across all levels and decisions within the organisation. At this level of maturity, the Pricing leader is seen as an innovator, and there is keen interest in what Pricing will bring next. Business leaders see, understand, and appreciate the value of pricing. 

The aforementioned cultural maturity scale is relevant not only for senior pricing management but also across all organisational levels. Languages are not learned in one go; they are acquired through multiple interactions and consistent practice. To improve pricing language skills within an organisation, a cycle of communication, reflection, modification, and re-engagement is necessary (Figure 2). 

Figure 2: Price Communication Cycle of Improvement 

As with languages, if you don't use it, you lose it. Additionally, languages continuously evolve, and pricing is no different. The markets in which we operate are constantly changing, necessitating innovative methods and approaches to pricing. Therefore, if there is no conscious effort to continuously upgrade pricing abilities and capabilities to enhance language skills within the organisation, the sense of unity represented by #OneOfUs can quickly devolve into exclusion, epitomised by #AloneOutside. 

In conclusion, mastering the language of pricing is essential for integrating pricing into your organisation’s culture and driving business success. By assessing your organisation’s pricing cultural maturity and actively working to improve it, you can ensure that pricing remains a key strategic asset for your company.