Some companies have a pricing process and a pricing model.

Others make do with just a pricing model or just a pricing process.

And then there are those companies that make do with some form of ad-hoc pricing, sometimes very smart and adaptive, often more like a frozen accident.

Most of us need to have a pricing process that leads to a pricing model.

Pricing model - a system of equations used to set price.

Pricing process - a set of algorithms and heuristics used to set price.

Pricing is not a once and done thing. It is not even a process. It is a cycle. Every pricing action leads to a response from competitors and customers. Market conditions change. Pricing excellence comes from treating pricing as a cycle that begins and ends with value creation. The axel of the cycle is a deep understanding of value.

Many companies are adding predictive analytics capabilities to their offers. We all want to know more about the future, there is more and more data available and deep learning style AIs have been described as prediction machines. How should this new functionality be priced? There is no one answer, but by following the basic value based pricing process one can get to an answer.