In Part 2 of the Pricing Transformation Series, Joanna Wells addresses a critical and often overlooked factor in improving pricing performance: the pricing team itself. While many organisations focus on pricing models, tools, or sales execution, the real issue often lies in how the pricing function is structured, supported, and developed.
This episode explains why pricing teams frequently struggle to deliver results, how capability gaps form, and what businesses must do to build a function that can drive pricing strategy, improve margins, and support long-term growth.
TIME-STAMPED NOTES:
[0:00] Intro: The Uncomfortable Truth
[0:29] Increasing Pressure on Pricing Teams
[1:50] The Accidental Evolution of Pricing
[3:12] Analytical vs. Commercial Capability
[4:19] Why Teams are Set Up to Fail
[5:48] The Capability Gap
[7:49] Managing Complexity vs. Structural Change
[9:29] Limits of External Consultants
[11:00] The AI “Silver Bullet” Delusion
[12:12] Defining a Value Culture
[14:23] Conclusion
The Uncomfortable Truth
0:00 This is probably the most uncomfortable topic in this series, but it’s also one of the most important. Last week, I discussed why pricing isn’t working in many businesses and showed that it’s not just a sales problem or a sales team problem, like discounting too much or not following the matrix. But to be honest, it’s not just a model problem either.
Increasing Pressure on Pricing Teams and Pricing Performance
0:29 Hello, and welcome to the Pricing College podcast. I’m Joanna Wells, founder and director of Taylor Wells Advisory, and we help businesses improve margins through better pricing strategy by fixing how pricing works, not just what the price is.
This episode is part of the new transformation series. And the reason for this is that many Australian businesses, B2B, retail, FMCG, trade businesses, you name it, pricing isn’t just under pressure; it’s being asked to do more than ever before.
Pricing teams are being asked to improve pricing, increase control, support growth, and respond to lots and lots of change and cost increases, and often all at the same time. And increasingly, I’m finding that responsibility for doing all these things now sits with the pricing function, whereas before it could have been split between the sales or the finance function.
Now, when things go wrong with pricing, it’s the pricing function’s fault, which raises a difficult question: Is the pricing function actually set up to deliver that?
The Accidental Evolution of Pricing Functions
1:50 We often assume, and it’s a fair enough assumption, that if pricing isn’t working, the model must be wrong in some way, and often, as I’ve discussed in many podcasts, it is. But at the same time, not always.
Because in many organisations, the pricing function itself has evolved without being properly designed. In a lot of businesses, pricing didn’t actually start as a strategic function. It emerged. Someone from finance took it on, or someone from sales were reassigned to the pricing team, or the role grew out of reporting needs or an emergency firefighting situation, generally to do with price increases and rolling them out, etc.
Not because the business made a deliberate decision to use pricing to improve margins, but because pricing wasn’t fully understood or prioritised at the time, or maybe a consultant recommended them to have a pricing team, but no one really fully understood how to engage and connect with that pricing team within the business.
3:12 Pricing is not just an analytical or control function; many people misunderstand that. Many businesses get that wrong with that one assumption; they assume it’s analytical, it’s a support function or an adage to finance. No, it’s a commercial capability. And when it’s not set up that way, what happens?
It struggles to influence decisions, it struggles to support sales, it struggles to lead change. And from my experience consulting with major Fortune 500 businesses, ASX businesses, private equity-led businesses, this becomes most visible during pricing transformations.
Because this is where expectations increase significantly. The business asks for better pricing outcomes, more consistency, improved margins—and what often happens is the pricing team defaults to what it knows: managing the system, not redesigning it.
Why Pricing Teams Are Set Up to Fail
4:19 Now, from what I see in many businesses, pricing teams are set up to fail. Yeah, that sounds harsh, but I’ll tell you why I think that. They spend most of their time defending legacy systems rather than designing them. Often, they get very caught up in day-to-day operational work; they’re thrown into firefighting, BAU emergencies, with little space to really step back and think, and rethink old processes and improve new structures or models.
They struggle to translate feedback from managers or sales or customers, or even consultants into meaningful change. They don’t always have that analytical depth or commercial exposure needed to challenge the status quo because they’re not set up correctly and positioned correctly in the business, which then continues to strain relationships with other stakeholders across the broader business.
So when pricing transformation starts, the expectation is: Oh, the pricing team are suddenly going to give us new thinking, simpler models, better outcomes, processes, map them out. But are we expecting too much when the reality is the function is being asked to lead change whilst still operating in a structure built to maintain the past?
5:48 And on top of that, there’s actually another layer to this when I come to think about it, and this is where it can become even more uncomfortable for pricing teams, but stay with me, I mean this in the most compassionate way, because I really see that there’s so much opportunity to improve here.
And this uncomfortable truth is based on our research, whereby we’ve assessed well over 3,000 pricing and commercial executives globally across Fortune 500 companies, you name it, small, large. We’ve assessed thousands of pricing and commercial executives over the last 15 years, and we’ve seen a consistent pattern. In many cases, individuals in pricing roles haven’t been equipped to think through pricing and financial problems at the level required. That shows up in very, very practical ways: the difficulty in breaking down complex pricing problems into clear decisions; great reliance on rules and precedent rather than structured reasoning; challenges linking pricing decisions to financial outcomes like margin and profitability; and a fairly limited ability to simplify or redesign pricing models.
In some cases, even core financial and pricing logic, like how margins are built, how discounts flow, how value translates into price, isn’t consistently understood or applied. Yet, these roles are expected to design pricing structures, influence commercial decisions, and lead transformation. So the gap becomes clear: The expectation of the role has moved, but the capability hasn’t always caught up.
7:49 Over time, you can just imagine just how much complexity increases when you set a team like pricing up incorrectly. Instead of reducing complexity, you’re actually just compounding it; legacy thinking gets reinforced, and improvement becomes sort of incremental as opposed to structural. Pricing teams over time become very, very good at managing complexity, and often they don’t even realise subconsciously how good they are at dealing with these ad hoc broken systems, processes and models.
So when it comes time to change a broken legacy system and improve and transform, pricing teams can feel even more under pressure, under the spotlight, because new systems are layered on from a technical perspective, models can get more detailed before they get simplified, and rules become tighter, and people don’t really like changing habits. But usability doesn’t improve, sales disengage, and exceptions continue, and the transformation often stalls. Now, it may be easy for us all to say, This is because the team isn’t delivering, but more often than not, the team has been shaped by the system and the business culture that they’re now being asked to change.
Limits of Pricing Consultants in Improving Pricing Performance
9:29 And at this point, some businesses start to think, Well, if our pricing team isn’t set up properly and our sales team are going to continue to discount, we’ll just bring on some consultants to fix it, give us that silver bullet solution. And to be fair, obviously, consultants can help during a transformation; of course, they can. They bring a lot of external expertise, a different perspective, objectivity, structure, and experience. But consultants don’t run your pricing day-to-day; your business does. They are not there to empower your teams; often, they’re there to protect their IP and maintain that division between you and your teams.
What we often see then is a new pricing model gets designed, frameworks are introduced, but once the project ends, the business reverts back to what it knows, its old habits and behaviours, and the subconsciousness of culture creeps back in, and complexity comes back in with new deals because the structure isn’t set up right for the business. And the model starts to, you know, lose its value and use; people stop using it. Because, why? People ask me, Why does that happen, Joanna? Well, it’s because the internal capability and culture haven’t changed.
11:00 And increasingly, there’s another response I’m now hearing with all this AI and automation; it’s the new trend, and it’s here to stay. And what I’m hearing is, Well, we’ll just use AI to fix things, the silver bullet AI. And again, look, I’m not against AI; AI has a very important role. But AI doesn’t replace the need for pricing thinking; it depends on it. AI can optimise within a system, and it can be used as a tool to leverage what the pricing team or the consultants have created, but it cannot define your pricing strategy.
It does not understand market dynamics and customer relationships or apply commercial judgment. And if your inputs are flawed, AI will scale the problem, not solve it. I think I’ve mentioned this before in another podcast: you put junk into a system, you will get junk out. And do you want to lead your business and strategy with junk and clutter?
Building a Value-Based Pricing Culture to Improve Pricing Performance
12:12 So, whether it’s a pricing team, consultants, or AI, I believe the same principle applies: you cannot outsource or automate commercial judgment. So if your pricing is failing, it’s broken, sometimes you might think it’s because of our pricing structure or a model, but other times you may think it’s because of the people, the culture. Yes, it might be these things.
This is why we often say we have to start any pricing transformation with a very detailed, objective, expert-led diagnostic to really understand what the problem is. But it’s not simply about individuals; it’s about how the function has been defined, the capability it has been built with, and the role it has been asked to play. Do we have a pricing function designed to report and control, or have we designed and built and nurtured a pricing function that can lead and improve and drive our commercial strategy? You can’t deliver pricing transformation with a function built to maintain the past. You cannot rely on consultants or AI to replace internal capability.
Real pricing transformation doesn’t just change the model or the system; it changes how the business understands and applies value. It’s built, what we call, I call this a value culture. I keep saying this: a value culture where pricing is understood, not worked around; value is clearly linked to price; decisions are consistent and explained; and everybody knows what they own, their steps in the process, how they can feed in and out of the pricing function and system; and capability exists across the business. Pricing capability is not just with one team.
〉〉〉 Get Your FREE Pricing Audit 〉〉〉
Conclusion: How to Truly Improve Pricing Performance
14:23 So if your pricing transformation isn’t achieving what you thought it should be achieving by now, don’t just look at the model, don’t just look at the tools, and don’t assume someone else will fix it. Ask yourself: have we actually built the capability to make pricing work? If this in any way resonates with any of you and what you’re seeing and feeling about your business, where pricing is under pressure but change isn’t really landing, change management is just long, hard, painful, and difficult, I suggest it’s really worth stepping back and just looking at how pricing is really operating in your business, not rushing to fix and change and just do for project management’s sake.
Read This CEO Pricing Strategy To Improve Margin Management & EBIT
Are you a business in need of help aligning your pricing strategy, people, and operations, and margin management to deliver an immediate impact on profit?
If so, please call (+61) 2 9000 1115.
You can also email us at team@taylorwells.com.au if you have any further questions.
