Companies can go through budget exercises and break things down by product line or lines of service or geographic territory. Then they would roll up those numbers to get their overall budgeted results. That’s good to see that type of support and that can help make the numbers more achievable.

But, there’s another step that companies sometimes fail to go back and complete.

That step can be modifying their pricing sheets. Each budget should show adjustments to the product line profitability. In turn, each year the pricing sheets should be modified to reflect the latest budgeted product line for the year.

Very often, that doesn’t happen and that continues year after year. Eventually, over time, like water eroding a rock, the pricing sheets no longer are comparable to the budgets.

The real danger can be when the pricing sheets show an attractive margin and you’re expecting that results will come in that way. However, when it comes time to roll up the actual results, they fall well short. It could be those costs that you had in the budget that just weren’t picked up in the pricing sheets. The pricing sheets now give a distorted view.

That can be very dangerous because, unlike the budget, the pricing sheets could be the very basis for doing quotation to customers. The revenue numbers are directly affected by the pricing sheets.

Just as you do annual budgeting, remember to go back and give your pricing sheets an annual checkup too. Make sure they’re in line with your budgeted targets and you have a greater change of hitting your numbers for the year.