What’s S.M.A.R.T. Pricing Anyway?

NOTE: this is a lightly edited transcript of this video.

So what’s S.M.A.R.T. Pricing anyway?

Hi, I’m Matteo Locane, independent Pricing consultant.

If you’re here, you’ve probably asked yourself at some point “how do I make sure I’m pricing my products or services the right way?”

Well, the S.M.A.R.T. Pricing framework helps you do just that.

S.M.A.R.T. Pricing is the sum of everything I have learned over the past 10 years or so about what makes a pricing strategy successful.

It will help you develop a pricing strategy that follows timeless principles, but at the same time is tailor-made for your business, regardless of your size or industry. Solopreneurs, freelancers, SMEs, large companies – all can benefit from S.M.A.R.T. Pricing.

The 5 Commandments of S.M.A.R.T. Pricing

The foundation of S.M.A.R.T. Pricing are its 5 Commandments.

Number 1: your pricing should be SIMPLE. Overcomplicating your pricing structure can confuse customers and even your own team. Simplicity leads to clarity, and clarity is key to success. If you can’t explain your pricing strategy in two-three lines, you have a problem.

Number 2: your pricing should be MEASURABLE. What gets measured gets managed, right? If you don’t track the impact of your pricing decisions, how do you know if they’re working? You need KPIs, and you need the right ones – otherwise the noise will drown out the signal.

Number 3: your pricing should be ACHIEVABLE. Your pricing strategy needs to align with your business capabilities and any external limitations. There is nothing wrong with stretch objectives, but don’t set unrealistic pricing goals or you may harm your brand or operations.

Number 4: your pricing should be RELEVANT. Pricing doesn’t exist in a vacuum; your strategy needs to align with overall business objectives. If your objective is to gain market share, you can’t really go for premium pricing.

Finally, number 5: your pricing should be TIME-BOUND. Pricing decisions aren’t forever, they need deadlines. Set timelines for evaluating and adjusting your pricing strategy based on your KPIs.

The 6 Pillars of S.M.A.R.T. Pricing

So these are the 5 Commandments, the foundation of S.M.A.R.T. Pricing. On top of them, to build a successful pricing strategy you need to pay attention to what I call the 6 Pillars.

Number 1: Leadership and Culture. Who owns the pricing in your organisation? Is pricing just an executor of instructions or a strategic partner? How do you train new pricing recruits, if you have a team? And so on.

Number 2: Environment. External factors like market conditions, economic trends, and even regulations will influence your pricing. If you’re not aware of those, you’re shooting in the dark.

Number 3: Data. You want data-driven decision making. What data do you need to collect? How often? How do you check for inaccuracies?

Number 4: Process. You need a clear, repeatable process for setting, reviewing, and updating your prices. Consistency is crucial.

Number 5: Tools. Whether it’s specific pricing software or market research tools, or even just an Excel spreadsheet, having the right tech in place will make a big difference.

Finally, number 6: KPIs. We have already mentioned them – what gets measured gets managed. Track the right metrics to ensure your pricing is performing. If something’s off, you’ll know where to adjust.

Bringing it all together

And that’s S.M.A.R.T. Pricing in a nutshell. Take the 5 Commandments, apply them across the 6 Pillars, and you’ll have a pricing strategy that is both built on a strong foundation and tailor-made for your specific business needs.

Are you ready to get S.M.A.R.T. about your pricing? Let’s chat! Whether you’re just starting or looking to fine-tune your existing strategy, I’d love to help. Book a free intro call and let’s build the right pricing strategy for you. See you soon!