One of the reasons cost accounting has gained such a strong foothold in
the pricing decisions of companies is that there is someone in charge of this
function, usually a cost accountant, estimating department, or the like. Today
it is common to find a chief pricing officer (CPO), director of pricing, yield
management group, or other such title, which is an enormous leap forward
for developing and diffusing strategic pricing skills. Finally, pricing is getting the promotion it has long deserved to an executive function, as companies around the world start to realize price is the major driver of profitability.
This is a very salutary trend, one bound to spread far and wide, helping to
make pricing a core competency in the intellectual capital company of
tomorrow.
For as good as it is to have a CPO, is it enough? Thinking back to Peter
Drucker’s marketing concept, the wealth a company creates for its customers
exists outside of its four walls. Professional pricers may suffer some of the
same fate as cost accountants—becoming too inward focused on efforts and
activities, not results and wealth creation.
But who is in charge of value? Who in thhe company is keeping their focus
on the outside in an attempt to understand and continuously enhance value
for customers? Perhaps it is time to create a chief value officer, a role to be
discussed in Chapter 21. Until then, since it has already been explained how
value—not cost—is the ultimate arbiter of price, it is worth exploring how
customers determine value, the subject we turn to next, as we explore what
and how people really buy.