executive | pricing power | 130408 | presentatie | onno oldeman
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Amsterdam OfficeBarbara Strozzilaan 3801083 HN Amsterdam, The NetherlandsTel: +31 (0)20 753 1253, Fax: +31 (0)20 753 1277e-mail: [email protected]: www.simon-kucher.com
Achieving Pricing PowerFlevum
Onno Oldeman, Partner
Amsterdam, 8 April 2013
Agenda
Flevum_Achieving Pricing Power
1. About Simon-Kucher & Partners
2. Top of Mind 2013
3. Achieving Pricing Power
- 1 -
Simon-Kucher & Partners
Flevum_Achieving Pricing Power
Source: Simon-Kucher
Track record of > 25 years on Smart Profit GrowthTM
Focus on marketing, pricing, sales
Global strategy consultants
- 2 -
Simon-Kucher growth
Flevum_Achieving Pricing Power
Source: Simon-Kucher
3 4 5 7 13 18 19 22 27 35 46 56 7190
112130147
165187
220248
283
354
436446
500
585
650
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
# Employees from 1985 to 2012
- 3 -
Global presence with 25 offices
Flevum_Achieving Pricing Power
Source: Simon-Kucher
Australia, SydneyChina, BeijingJapan, TokyoSingapore, Singapore
USA, BostonUSA, MiamiUSA, New YorkUSA, San FranciscoBrazil, São PauloChile, Santiago de Chile
Italy, MilanLuxembourg, LuxembourgPoland, WarsawSpain, MadridSwitzerland, Zurich The Netherlands, AmsterdamTurkey, IstanbulUnited Kingdom, LondonUAE, Dubai
Americas Europe/Middle East Asia/South Pacific
New offices in 2013New offices in 2013
Austria, ViennaBelgium, BrusselsDenmark, CopenhagenFrance, ParisGermany, BonnGermany, CologneGermany, FrankfurtGermany, Munich
Santiago de ChileSantiago de Chile
São PauloSão Paulo
- 4 -
Leading the pack in marketing & sales
Flevum_Achieving Pricing Power
* Maximum 500; Source: manager-magazin August 2007/IMB & 2011 (Institute for Management & Consulting); Survey of 264 Top Managers
Rank Consultancy Score*
1 Simon-Kucher & Partners
2 Boston Consulting Group
3 McKinsey & Company
4 Bain & Company
5 Roland Berger
Best Consultancies in "Marketing & Sales"
401
370
346
344
338
- 5 -
Pricing
Commercial strategy Marketing
Sales & CRM
Clear focus: Smart Profit Growth
Flevum_Achieving Pricing Power
Source: Simon-Kucher
Stra-tegy
Sales & CRM
Marke-ting
� Market strategy
� Brand and assortment strategy
� Channel strategy
� Pricing strategy
� Competitive strategy
� Brand portfolio management
� Assortment optimization
� Innovation management
� Segmentation
� Marketing efficiency
� Value-based pricing
� Pricing process and organization
� Innovative pricing models
� Price architecture and trade terms
� Price communication
� Price increase programs
� Key account management
� Sales force effectiveness
� Management of distributors
� Promotion management
� KPI’s & incentive systems
� Negotiation training
Pricing
Smart Profit
Growth
- 6 -
How others describe Simon-Kucher
Flevum_Achieving Pricing Power
Source: Simon-Kucher
"…world leader in giving advice to companies on how to sell their
products…"
"…the world's leading pricing consultancy…"
"Simon-Kucher is the world’s leading pricing consulting firm."
"…world market leader on pricing…"
- 7 -
NL
USA
Simon-Kucher thought leadership
Flevum_Achieving Pricing Power
Source: Simon-Kucher
JapanUSA NL Hungary
Korea Germany GermanyChina
USA Brazil France
UK
Spain
Books (selection) Articles (selection)
- 8 -
Simon-Kucher works side by side with industry leader s
Flevum_Achieving Pricing Power
Source: Selection of Simon-Kucher references
Financial Services
Automotive Retail/CG
Life Sciences
Software / Technology
Media
Industrial Goods
Logistics / Travel
- 9 -
Industry specific pricing challenges we encounter ( 1/3)
Flevum_Achieving Pricing Power
Source: Simon-Kucher
Wholesale / Retail:
� How to influence, measure and capture the value per product category?
Consumer Goods:
� How to optimize pricing & trade terms across customers, channels and countries?
- 10 -
Industry specific pricing challenges we encounter ( 2/3)
Flevum_Achieving Pricing Power
Source: Simon-Kucher
Industrial Goods:
� How to optimize list prices and discounts for >100,000 products and >3,000 customers?
Ingredients:
� How to structure product management and key account management?
- 11 -
Industry specific pricing challenges we encounter ( 3/3)
Flevum_Achieving Pricing Power
Source: Simon-Kucher
Media:
� How to counter the discounting magnet in cross-media advertising?
Financial services:
� How to structure and monetize your products and services?
- 12 -
Agenda
Flevum_Achieving Pricing Power
1. About Simon-Kucher & Partners
2. Top of Mind 2013
3. Achieving Pricing Power
- 13 -
Achieving profitable growth: Top of Mind 2013
Flevum_Achieving Pricing Power
Pricing power
Dedicated pricing function
C-level involvement
- 14 -
The dilemma
Flevum_Achieving Pricing Power
Source: Global Pricing Survey 2012
Largely exhausted
Profit = Price � Volume - Cost
Limited possibilities
Not yet optimized
- 15 -
Case example
What is the most effective profit lever?
Flevum_Achieving Pricing Power
Source: Simon-Kucher
Price
€60
1 m
€100
€30 m
Variable unit costs
Sales volume
Fixed costs
- 16 -
Profit driver
Price
Old
€60
1 m
€100
€30 m
Variable unit cost
Sales volume
Fixed costs
Price as the most effective profit lever
Flevum_Achieving Pricing Power
* Assuming ceteris paribus; Source: Simon-Kucher
New
€57
1.05 m
€105
€28.5 m
A 5% improvement of …
+50%
Profit
New
€13 m
€12 m
€15 m
€11.5 m
... leads to a profit increase of …
+30%
+20%
+15%
- 17 -
Obtaining pricing power
Flevum_Achieving Pricing Power
Source: Simon-Kucher
Pricing power is the ability
of a company to get the
price it deserves for the
value it delivers.
- 18 -
Pricing power
Flevum_Achieving Pricing Power
Source: Simon-Kucher research
"The single most important
decision in evaluating a
business is pricing power ."
Credit Suisse: Pricing Power Ranking Warren Buffet
- 19 -
Pricing power: Strong impact on profits
Flevum_Achieving Pricing Power
Source: Global Pricing Survey 2012
Low pricing power reduces profits by
25%
Average profit margin of last three years (index)
100
75
Companies with high pricing power
All others
- 20 -
(Reported) reasons for low pricing power
Flevum_Achieving Pricing Power
Source: Global Pricing Survey 2012
1. "We are a commodity"
2. "We are a distress –purchase / low involvement product"
3. "Our competitors are stupid"
- 21 -
"We are a commodity"… so?
Flevum_Achieving Pricing Power
Source: Simon-Kucher research
₤1.55/litre ₤4.52/litre₤0.50/litre₤0.01/litre
- 22 -
"We are a low involvement product"… so?
Flevum_Achieving Pricing Power
Source: Simon-Kucher research
Sensor Excel"1G"
Sensor 3"2G"
Mach 3"3G"
M3 Power"4G"
Fusion"5G"
Fusion Power"6G"
Blades 2 3 3 3 4 4
Electric – – – ���� – ����
Trimmer – – – – ���� ����
Priceat launch
€7.99 €9.99 €9.99 €14.99 €15.99 €19.99
- 23 -
5%7%
88%
We did – intentionallyWe did – unintentionally
Who started the price war?
"Our competitors are stupid"… really?
Flevum_Achieving Pricing Power
Source: Simon-Kucher & Partners Global Pricing Study 2012
Yes58%22%
19%
Is your company currently engaged in a price war?
No- there is a price war, butwe are not affected
No- there isno price war
- 24 -
1. No systematic pricing approach
2. Strategy and leadership deficits
3. Insufficient pricing know-how (methods, people, "real" value pricing)
Real reasons for lack of pricing power
Flevum_Achieving Pricing Power
Source: Simon-Kucher
- 25 -
Achieving profitable growth: Top of Mind 2013
Flevum_Achieving Pricing Power
Pricing power
Dedicated pricing function
C-level involvement
- 26 -
No clear pricing ownership = chaos
Flevum_Achieving Pricing Power
Source: Simon-Kucher
"I know what our competitors charge"
Pricing complexity is a fact of life, because it almost always involves:
… too many people
… too many opinions
… too many interactions
… too much data
… too little time
Sales
"I know what our costs are"
Finance
"I know what our customers say"
Value pricing
Marketing
"I know how great our product really is"
Product
Low prices
Target margins
Brand premium
- 27 -
Dedicated pricing function improves price performan ce
Flevum_Achieving Pricing Power
Source: Simon-Kucher & Partners Global Pricing Study 2012
…27% more often "high pricing power"
…15% more often successful price increases
…11% higher price implementation success
…14% more often optimistic EBITDA expectations
Pricingpower
Priceincreases
Price implementation
Profitable growthexpectations(increase)
127
100Others
With pricingfunction
Companies with dedicatedpricing function are/have…
115
100Others
With pricingfunction
111
100Others
With pricingfunction
114
100Others
With pricingfunction
- 28 -
Pricing organization: Where should it sit?
Flevum_Achieving Pricing Power
Source: Simon-Kucher
High hierarchy level
Signaling
Decision competence
Distance to customer
Long decision flow
Low hierarchy level
Customer proximity
Flexibility
Customer proximity
Flexibility
Missing co-ordination
Inconsistencies
Bundling of pricing concepts
Focus on total company goals
Distance to customer
Missing flexibility
Missing decision competence
Central
Decentral
- 29 -
What is the right type of pricing organization? It d epends
Flevum_Achieving Pricing Power
Source: Simon-Kucher
Central pricing Hybrid Divisional/regional pricing
� Strong, global brands, transparent prices
� High risk of arbitrage
� Need for standardization of pro-cesses to increase pricing quality
� Local inputs to capture different local willingness to pay
� Market differences/regulations between decentralized units too different for standardized pricing
� High standardization degree of pricing processes to ensure consistency
� Local inputs to differentiate local willingness to pay
� Central price control important for brand image
� Brand assures same quality everywhere
� Easy for consumers to buy products elsewhere
� High international transparency of prices
� High arbitrage risk
� Central pricing competence center within marketing
� Regional pricing units in contact with national sales
� Heterogeneous business units (e.g., healthcare vs. office)
� Low level of standardization possible
� Pharmaceutical wholesaler
� Different health systems by country, high need for local differentiation
- 30 -
Achieving profitable growth: Top of Mind 2013
Flevum_Achieving Pricing Power
Pricing power
Dedicated pricing function
C-level involvement
- 31 -
C-level involvement drives pricing performance
Flevum_Achieving Pricing Power
Source: Simon-Kucher & Partners Global Pricing Study 2012
Pricingpower
Priceincreases
Price implementation
100Others
C-level
…35% more often "high pricing power"
…18% more often successful price increases
…30% more often optimistic EBITDA expectations
…7% higher implementation success
Companies with increased C-level involvement in pricing are/have…
118
100Others
C-level
107
100Others
C-level
100Others
C-level 130
135
Profitable growthexpectations(increase)
- 32 -
Porsche & General Motors: different leaders, differ ent strategies
Flevum_Achieving Pricing Power
* for Porsche partly estimated
"We have a policy of keepingprices stable to protect ourbrand. When demand goes downwe reduce production but don’tlower our prices ."
Wendelin Wiedeking, CEO Porsche 1992-2009
Year
Operating margin %*
-15%
-10%
-5%
0%
5%
10%
15%
20%
'00 '01 '02 '03 '04 '05 '06 '07 '08"Fixed costs are extremely highin our industry. We realized thatin a crisis weare better off with loweringprices than reducing volume."
Richard Wagoner, CEO GM 2000-2009
- 33 -
Clear direction from top management
Flevum_Achieving Pricing Power
Source: Simon-Kucher
Søren Skou,CEO Maersk Line
"In terms of size and market share we are where we want to be.Therefore our strategy changes:From 'growing faster than the market' to 'grow in line with the market'.We hope that our competitors are also satisfied with their position. If that is not the case, we will defend our position with all means."
FTD, March 2012
- 34 -
Maersk: Turn around after change of top management
Flevum_Achieving Pricing Power
Source: Bloomberg April 25, 2012
"Back to black" program:
� Stop market share growth goal
� Capacity reduction
� Systematic price increases
� Clear communication of new strategy
0
100
200
300
400
500
600
700
800
900
1000
16-8-2010 16-2-2011 16-8-2011 16-2-2012
HARPEX (charter rates)
Entire boardof Maersk
exchanged
- 35 -
Leaders' task: Sales can't always be "nice"
Flevum_Achieving Pricing Power
Source: Simon-Kucher
You have to get what you deserve!
... when he sees your service offer?
... when he sees your price?
How should your customer react ...
- 36 -
Summary
Flevum_Achieving Pricing Power
Obtaining pricing power brings you higher profits. Look for the real reasons of missing pricing power and develop the solutions.
A dedicated pricing function significantly improves price performance. Setting the right pricing organization depends on your ambitions, culture and strategy (e.g. on hierarchy and customer proximity).
C-level involvement severely increases the ability to successfully implement pricing improvements. C-level should provide direction and set the example (e.g. Porsche, Maersk).
- 37 -
Agenda
Flevum_Achieving Pricing Power
1. About Simon-Kucher & Partners
2. Top of Mind 2013
3. Achieving Pricing Power
- 38 -
Where does it go wrong in daily practice?
Flevum_Achieving Pricing Power
Source: Simon-Kucher
"We don’t really know what premium we
deserve"
"Our prices are cost-plus and mainly
historically grown"
"Do we charge for everything we
deliver?"
"We communicate and sell too much on price, instead of on
value"
- 39 -
"With our stupid competitors attacking
us, we end up in a price war"
Building Pricing Power calls for action on three co re disciplines
Flevum_Achieving Pricing Power
Source: Simon-Kucher
Typical deficiencies and leakages
What the customer is
willing-to-pay…
… and what we actually get
Product offerings that do not fit the
market requirements
Prices which are either too high or
too low
Value not defended, discounts based on gut-feel and ‘fear’
Portfolio & pricing strategy
Value based pricing
Value selling
- 40 -
Pricing Power Framework
Flevum_Achieving Pricing Power
Source: Simon-Kucher
� Segment market and customer base, clarify price strategy
� Determine value drivers per segment and willingness-to-pay
� Differentiate offering, pricing & sales approach
1
2
3
� Develop value based pricing approach , tools and rules
� (Un)bundle portfolio to maximize willingness-to-pay
� Reinvent your price model and metric
4
5
6
� Optimize value selling competence , from gut-feel to structured decisions
� Optimize value communication , set anchor prices
� Improve pricing control , setup KPIs and monitoring framework
7
8
9
Simon-Kucher & Partner’s Pricing Power framework
Value pricing awareness and capability development
Value selling
Value based pricing
Pricing & portfolio strategy
- 41 -
Know the value: Understand your premium and brand s trength
Flevum_Achieving Pricing Power
Source: Simon-Kucher
� New filter innovation
� Structured value-driver analysis
� Price increase in prices in 3 steps by 36%
� Marginal loss of market share
Project example
- 42 -
Identify the key value drivers and evaluate perform ance
Flevum_Achieving Pricing Power
Source: Simon-Kucher
� …
� …
� Quality of content
� Search engine usability
� Archive function
� Content depth
� Author reputation
� Price level
� Flexibility of offering
� After sales process
� …
Identify value drivers Rank on importance Assess performance
Customer X Competition
4,2
4,1
4,1
3,7
3,5
3,1
2,6
1,6
1,6
1,6
1,1
- 43 -
Project example
Use customer insights to challenge internal beliefs
Flevum_Achieving Pricing Power
Source: Simon-Kucher
Strategic Disadvantages
StrategicAdvantages
ConsistencyOver-
Performing
Relative Performance
Impo
rtan
ce
9
1
2
3
4
5
6
7
8
10
11 12
13
14
Low High
Low
Hig
h
Strategic Disadvantages
StrategicAdvantages
ConsistencyOver-
Performing
Impo
rtan
ceRelative Performance
2
1
8
9
10 4
11
6
3 14
5
7
Low High
Low
Hig
h
Customer perspectiveInternal perspective
6 Price
�
Project example
- 44 -
Assess premium and brand strength per segment
Flevum_Achieving Pricing Power
Source: Simon-Kucher
0%
10%
20%
30%
40%
On-pressperformance
End-useperformance
Serviceprograms
Technicalsupport
Speed ofdelivery
On-timedelivery
Price
% of sales
Relative importance of value driver
Want price only 23%
Want no risk 9%
Want the best 29%
Want it now 39%
Size of customer segment
Project example
- 45 -
Develop a differentiated proposition for each client segm ent
- 46 -
Price
Volume
Willingness-to-pay notexploited!
Customers notreached yet!
Price
‘One-size-fits-all’ Price
Flevum_Achieving Pricing Power
One-size fits all price
Volume
Super Eco
Super Premium
Differentiated Prices
Eco
Standard
Premium
Differentiation= from rectangle totriangle
Differentiated price
Differentiation works!
Flevum_Achieving Pricing Power - 47 -
Source: Simon-Kucher
DUS ���� BAR
www.klm.de:€492 per seat
www.klm.nl: €284 per seat
Private tariffs
SIM-only 50 : €2.95/month + 6 ct/min. (incl. 50 min.)SIM-only 500 : €17.95/month + 4 ct/min. (incl. 500 min.)
Bottle of water
Airport : €3.45 per liter
Supermarket : €0.50 per liter
B2B : €4.10 / consignment
C2X: €8.90 / consignment
< 10kg, Germany
Combine three pricing methods
Flevum_Achieving Pricing Power
Source: Simon-Kucher
Cost-plus Competition-oriented Value-based
Challenge: just costs are high or low, the perceived value is not
Challenge: determine your main competitor and benchmark
Challenge: understand willingness-to-pay and price elasticity
Costs
% mark up
€ 160
€ 100
€ 40
Competitor product A
Competitor product B
Competitor product C
Our productVolume
Low elasticity
High elasticity
Price level
- 48 -
Pitfall of cost-plus pricing, potential of value pr icing
Flevum_Achieving Pricing Power
Source: Simon-Kucher
Non-metallicpaint
If the automotive industry sets prices according to the cost-plus approach,metallic paint would cost €30 – but the automotive i ndustry does not!
Power/Value Pricing
Willing-ness
to pay
Cost
770 €
20 €
Cost-Plus
Profitpotential
Metallicpaint
- 49 -
Issue with competitive pricing: price wars
Flevum_Achieving Pricing Power - 50 -
"They are aggressive and
want to steal market share!"
Company
A
Company
B
"We have to defend our volumes at all
costs."
Aggressive price behavior
of market leader
Fear of market leader to loose
volume
Followers feel threatened
Price reactions by followers to
defend market share
Crisis leads demand to drop
Vicious cycle
Culture of market share Vicious cycle of price decreases
Price the value: Do real value pricing
Flevum_Achieving Pricing Power
Source: Simon-Kucher
€83,000
€54,700
911
Boxster S
Success factors:
� "Don't follow the crowd!"
� Know and quantify thevalue drivers!
- Design
- More power (15hp)
- Handling
€60,300Cayman S
Project example
- 51 -
Measure willingness-to-pay, use multiple sources an d methods
Flevum_Achieving Pricing Power
Source: Simon-Kucher
IndirectConjoint analysis
van Westendorp
Data analysis
PriceStrat/ ComStrat
Expertknowledge
(PriceStrat)
Historical transaction data
Benchmarks: SKP projectexperience
Available competitor information
Gabor Granger/ Neuropricing
Merchant questionnaires Sources
Methods
- 52 -
Re-invent your price model
Flevum_Achieving Pricing Power
Source: Simon-Kucher
� Change of price model: from price per tire to price per km
� Customer perspective: costs are aligned with revenue basis (per km)
� Customer gets stable price per km
- 53 -
Value-based price metric: Enercon charges for the yi eld
Flevum_Achieving Pricing Power - 54 -
� Founded in 1984; Revenue: $ 4 billion;42% of patents world wide in this field.
� Enercon partner concept: Price of service contract depends on yield of wind park; 86% of customers sign 12-year service contract.
� Price for wind tower depends on wind situation in specific region.
Use pricing to differentiate or to redefine revenue models
Flevum_Achieving Pricing Power
P = total price; Min = minutes; PPU = pay per use; MRC = monthly recurring costSource: Simon-Kucher project experience and analysis
Pay per use Buckets Flat fees
PPU with max. charge
Pro-gressive /decliningPPU
PPU w/ or w/o MRC
Incre-mentalbuckets
Bucket + PPU w/ max charge
p
Min
p
Min
p
Min
Bucket +PPU
Pure flat fee
Fair-use flat fee
Adaptive flat fee
p
Minp
Min
p
Periods
p
Min
p
Min
p
Min
Examples simple PPU: � Price per min. / MBExamples innovative PPU:� Price per session � Price per workplace
� Competitive intensity
� Product comparability
� Price structure differentiation
� Customer's (wrong) estimation of usage
� Product life cycle stageExamples: � Full flat� Adaptive flat� Company flat
Examples: � Minute buckets� GB buckets� Increment buckets
Influencing factors
- 55 -
And create clever bundles to boost earnings per cus tomers
Flevum_Achieving Pricing Power
* WtP: Willingness-to-pay, ** VC: Variable cost
Budget 150 €
Quantity
€
WtP
VC
120 € 50 €
€
WtP*
VC**
Quantity
ProfitProfit
Hotel room Dinner
Quantity
€
VC
WtP
150 €
Profit
Room & dinner
Win-Win situation
� Customer has a price advantage of nearly 12%
� Hotel’s profit increases by 25%
Bundle
- 56 -
Use multiple bundles to address differences in cust omer needs
Flevum_Achieving Pricing Power
Source: Simon-Kucher
Basic Standard Premium
� Bug fixing � � �
� Correction of typographical errors � � �
� Helpdesk (response time) 2 days � 12 hours � 2 hours �
� Upgrades bi-annually � quarterly � as released �
� Updates bi-annually � quarterly � as released �
� Additional service fees/hour € 35 � € 30 � € 25 �
� Remote technical support (localization) 100 hours � 250 hours � 500 hours �
� Remote technical support (exploitation) 100 hours � 250 hours �
� Maintenance services bi-annually � quarterly �
� Monitoring systems logs �
� Project Management of content activities �
� Software training �
� Software consultation �
Annual SLA payment € 50,000 € 70,000 € 90,000
Recommended
- 57 -
Project example
Sales reps will tell you: "Every deal tells its own story"
- 58 -
Source: Simon-Kucher
… it's a very small customer and from the
pharmaceuticals industry where you can
always get a little extra…
… their purchaser was really tough. We had to
give in a little…
Selection of responses from sales reps.
"Which factor had the biggest influence in
determining the deal's final price?"
… we had to lower the price because of
increased competition…
Flevum_Achieving Pricing Power
Product-specific base
price
Product specific
Customer specific
Order specific
Targetprice
Peer Pricing: Definition of price drivers as basis for a structured price logic
Target prices are calculated sequentially by applying mark-ups / discounts for defined price drivers.A defined price corridor serves as a negotiation space for the sales reps.
- 59 -Flevum_Achieving Pricing Power
� Differentiation of prices according to product, customer and order related factors
� Realized prices as reference points for future price setting
� Expert judgment as reference for future price setting
…
Format
Specialty
Target price
Thickness
Basis
Customer potential
Customer size
Payment terms
…
…Small order surcharge
Min. price
Product price
Customer price
Order price
IndustryOrder
volume
Achiever price
1 2 3
Project example
To boost win rates a systematic pricing & value selling process is required
- 60 -
Source: SKP Project Database
Flevum_Achieving Pricing Power
Base price
Product specific price 1
List price
Product Value
Client price2
List price
Client Discount
0
Final Price
Order Surcharge
Net Price
Order specific price
Net Price
3
e.g.- Thicker beams- Extra protection
e.g.- High volume client- Good payment terms
e.g.- Small orders- Specials requiring research
Project example
Sell value: Anchor prices highly influence purchase decision
Flevum_Achieving Pricing Power
Source: Simon-Kucher
68%
32%
Base scenario (print implicit) Alternative scenario (print explicit)
16%
0%
84%
- 61 -
Steer behavior through right value communication…
Flevum_Achieving Pricing Power
Source: Simon-Kucher
Price communication
1 month
29,95 €
3 months
59,85 €
6 months
95,85 €
1 month 3 months
You save33%
6 months
You save47%
Select 1 month
Select 3 months
Select 6 months
19,95 €per month
29,95 €per month
15,95 €per month
0%
10%
20%
30%
40%
50%
60%
Changes in sales volume
Time
Volume distribution (%)Introduction of new
price communication
3 months
1 month
6 months
Before
After
Project example
- 62 -
…and value selling
Flevum_Achieving Pricing Power
Source: Simon-Kucher
"If needed, could you also deliver on short notice the next day?"
"No problem – this is covered in all of our service contracts."
Before…
Customer
Cost mindset:"This doesn’t cost us more,
so the customer doesn’t have to pay more!"
…after
"Of course, it will cost €30 more for the added
planning work."
Value mindset:"Service is important to the customer, so he should be willing to pay extra for it."
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Project example
Four steps to build Pricing Power
Flevum_Achieving Pricing Power
Source: Simon-Kucher
� Segment market and customer base, clarify price strategy
� Determine value drivers per segment and willingness-to-pay
� Differentiate offering, pricing & sales approach
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3
� Develop value based pricing approach , tools and rules
� (Un)bundle portfolio to maximize willingness-to-pay
� Reinvent your price model and metric
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6
� Optimize value selling competence , from gut-feel to structured decisions
� Optimize value communication , set anchor prices
� Improve pricing control , setup KPIs and monitoring framework
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Simon-Kucher & Partner’s Pricing Power framework
Value pricing awareness and capability development
Value selling
Value based pricing
Pricing & portfolio strategy
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Thank you!
Flevum_Achieving Pricing Power - 65 -