Pricer’s Points: Elon Musk pricing strategy email to Tesla dealers – we all can learn from this email | Michael Doyle

In this one email, we have the basis for a pricing strategy framework that you can use to guide your pricing strategy.

Key observations:

Pricing strategy is CEO concern

Pricing strategy and tactics are a primary concern of the CEO and Founder of a $30 Billion company. Jeff Immelt CEO General Electric also reviews pricing outcomes.

There are a limited number of progressive CEOs who will take such an active and personal interest in pricing strategy and outcomes.

Gross margin and EBITDA contraction, coupled with increasing scale of revenue under management make pricing a highly leveraged instrument of earnings growth.

In my view, any CEO who leaves the development of pricing strategy to the discretion or the Sales or Marketing Director has a death wish.

In 2017 alone we have seen multiple CEOs depart under a cloud and almost always, poor pricing decisions were a primary driver of that departure.

CEOs that take a presidential or Chairman style role in running their companies almost always get burnt by strategic pricing decisions made by mid-level management where there is no oversight and control leading back to the CEO in some form.This does not mean the CEO becomes cc’d on an email chain of daily spot pricing discussions or weekly tactical meetings to evaluate the wisdom of offering X% discount to a customer.

The CEO needs to be across the guide rails and rules of racing that have been established by a pricing strategy council sponsored by the CEO.

The CEO arrests the problem early.

Musk arrested the issue of price discounting early. Many executives wait until their house is truly on fire in every room before calling the fire brigade. What is different in this example from Musk’s involvement, is his identification of the critical inflexion point for his company’s strategic direction.

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Elon Musk pricing strategy email to Tesla dealers – we all can learn from this email | Micahel Doyle.


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