How Much Time Should I Plan for a Pricing Project?

One frequent question that we get from new potential clients is “How much time should they plan for pricing and value projects?”

In order to best answer this, we actually need to look at three different components, which we're going to walk you through today so that you can best plan for a successful project that meets the timelines of your organization. 

1. The first thing that you need to look at is “When does the project need to be done?” 

Backward planning will allow for you to project when you would be implementing a new price. From there moving backward, how much time will you need to actually implement any value adjustments, and communicate the new pricing to your stakeholders? Then moving backward from there would give you the end date of a project. So depending on how long a project is, that would give you a good time frame of when you should even begin a pricing project.

For example, if your membership is on an annual cycle with a January 1 start date and members are renewing during November and December, and you begin communicating new pricing and value by September 1st, you would need to have made any changes by September 1 of the prior year. If those changes might take two to three months, which is a pretty quick turnaround -- sometimes, clients need more like six to nine months in order to make any changes --  then that would mean that you would need to have your pricing projects completed by June 1st so that you have the summer to make any changes needed. Working backward from there, if a pricing project takes three or four months for a membership, then you would want to begin your pricing project as early as February or March in order to raise your price for a January 1st membership. In this example, you can see that sometimes you're working on pricing at least one year out, sometimes even further out, depending on how drastic of a change you're looking to make to your products. 

2. The second thing that we want you to consider is the frequency of these cycles.

How often will you do an intensive pricing project with market research and all the different components? You won't necessarily be doing this every single year, that would be overkill. But we do recommend that you do an intensive project about every three years, five years at the very most, this will allow for you to do drastic changes on a routine basis. And then during the in-between years, you can do incremental increases while making smaller value adjustments based on the strategic plan that we create for you. 

This means that you should be planning for every three to five years, having a good year or two before you're looking to even raise prices when you begin a pricing project. This will allow for you to spread your pricing projects across your product landscape so that maybe one year you're focusing on membership and then the following year you're focusing deeper on events. Then the year after that maybe you're focusing deeper on sponsorship and educational products as an example. So you might always have something that you're evaluating at a deeper level, but it doesn't mean that you're always doing everything at one time always. 

3. Third, the project itself. 

Most pricing projects that we perform our pricing for associations go through a few key phases:

• The first phase is our kickoff, where your team meets our team, our team meets your team, we go over timeline, expectations, communication policies -- everything that you will need to be successful throughout your pricing project. We also define what success will look like at the end of the project. This way everyone is on the same page and we're moving in the right direction. 

• The second phase is our data analysis phase. During this phase, your organization will share data with our organization that we request so that we can begin to analyze historical consumer behavior, segments, purchasing patterns, and other details depending on what type of product we're evaluating. At the end of this phase, we report our findings, trends, and other things that are of significance to us, as they can drive decision-making moving forward. 

• The third phase is our market research phase. In this phase, we are conducting market research with your audience through typically multiple modalities, which can include surveys, focus groups, and one on one meetings or calls with your stakeholders. During this time, we're gathering data, we're trying to expound upon the data that you already have given to us by ensuring that we're getting data according to segment. 

Our primary focus is on two things: the first being value and the second being pricing sensitivity.

When it comes to value, we're looking for things such as “What should be added that isn't currently there?”, “What can be sunsetted that no one finds value in any longer?”, and “What should be amplified out of what you're already doing?” 

When it comes to price sensitivity, we're beginning to broach the concept of a price increase, and what the willingness to pay might be from your audience, contingent on the value adjustments that your organization can make. 

• The fourth phase of a project is market testing. This is where we use conjoint analysis to present your current product in its form, with value in pricing against one or two new potential packages of value and pricing. And we present it to your audience to see what they prefer, what they pick, and why. This will let us know if we have actualized the correct price for optimal revenue, as well as if we have captured the right value levers that your audience needs from you in order to justify that price. 

• Finally, we move into our roadmap phase where our team creates an intensive document for your organization that will cover the next three to five years. In that document. We provide all of the findings from each phase, along with our recommendations for the next 12 months, for 12 to 24 months, and then for 36 months and on. This allows your team to have phased planning where you can add value over the next few years, as well as increase your price until it's time in three to five years to do another pricing project. 

The biggest takeaway that we would want any potential client to have from this information is ‘don't rush the process.’

You'll always be in a cycle of improvement because pricing and value are not about getting it right or wrong, but about getting the best answer that we can. This means that the target is always moving and your client's needed value can easily evolve every year or two. 

Our goal is to capture a moment in time and deliver upon that in a sustainable way for the next few years before it's time to really look at that data again.