The 4-Stage Journey to Pricing Mastery

7 October, 2015

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Many fuel retailers began their businesses using manual pricing practices. Internal spreadsheets or price-by-instinct may have worked in a simpler time. But today’s best-in-class retailers use sophisticated pricing tools and strategies to maximize volume and margin. Fuel retailers wanting to take this step up may believe that all their pricing problems will be solved if they choose the right software tool. And, yes, the right pricing tools are crucial—but the right technology is only one ingredient in becoming a pacesetter in pricing.


Stages of Pricing Mastery
Kalibrate pioneered the use of data-driven fuel pricing practices. But guess what? After observing clients around the world over 20 years, we came back to a fundamental truth. The technology is only as good as the people using it. It makes sense. Imagine two Formula 1 cars on the line—one driven by a beginner, and one driven by a pro. Who’s going to win the race?

We see that as pricing teams become more capable, pricing performance increases and incremental profits rise. At the peak of pricing mastery, a fuel retailer is best-in-class and likely outpacing all other competitors. We saw this journey happening in 4 stages:

Stage 1. Manual pricing
At this stage, a pricing analyst understands how to create and deploy prices, possibly from a spreadsheet system or basic pricing software that is not adaptable or scalable. This is the first step in taking the emotion out of pricing decisions.

Stage 2. Simple rules-based pricing
With a software tool, rules-based pricing enables an analyst to work from more than gut instinct. The analyst can set more prices faster. This is the entry point for becoming competitive in dynamic pricing.

Stage 3. Optimal pricing
Optimal pricing is a step up in sophistication from simple rules. Pricing analysts use their pricing tools to balance a number of competing market forces—like traffic, competitor pricing and consumer buying patterns—to dynamically generate the right price at the right time of day at the right location. Many fuel retailers who achieve this stage are content to rest on their laurels.

Stage 4. Pricing mastery
Optimal pricing can be pushed one step further to drive more business value. Pricing practices can be consciously aligned with the company’s overall strategies. Pricing insights can inform location strategies and contribute to necessary innovations to respond to changing market conditions.

How Pricing Mastery Happens
Pricing mastery happens through a conscious process of continuous improvement. It doesn’t happen by accident. This insight was Kalibrate’s motivation for created a systematic development process for our clients. It combines performance management, competitor and industry benchmarking and ongoing education to help analysts become better at understanding strategies and implementing tactics.

The more capable the analyst becomes, the more performance he or she can leverage from a pricing system. Kalibrate’s Pricing Cloud can support peak pricing performance only if the analyst using the system knows what he or she wants to achieve. So Kalibrate invests in helping pricing analysts develop their skills—and their value to their companies—from Stage 1 to Stage 4 mastery: 

  • Stage 1 Analyst — Beginner: I can “turn the crank” and produce prices.
  • Stage 2 Analyst — Learner: I’m in control of pricing.
  • Stage 3 Analyst — Achiever: I’m sure that these prices are optimal.
  • Stage 4 Analyst — Contributor: I’m a strategic asset to my company and can quantify the incremental impact to the bottom line.

    As a Stage 4 Contributor, a price analyst becomes an undeniable asset to his company, able to realize maximum benefit from his company’s pricing investment and able to adapt when—inevitably—the next wave of change arrives.

 Download Fuel Pricing Mastery E-Book


Kalibrate’s Commitment to Client Success
Kalibrate’s Client Success Group is dedicated to full engagement and ensuring clients receive maximum value from Kalibrate through focus on four commitments: Communicaton, Service, Follow-up and Performance. To learn more, talk to us.

Topics: Fuel Pricing

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