Contact our Pricing Experts
The inability to effectively achieve price increases
Difficulties in quickly setting and getting prices in the market compared to competitors
A high percentage of your total volume is sold to low-margin customers
You see a wide variation in discount levels without underlying commercial rationale
There is low to no visibility on product, customer, and transactional profitability
When building your pricing strategy, you should ensure it aligns with your overall company objective and underlying business strategy.
Besides, make sure you provide a strong value proposition to all your targeted customers. The stronger it is, the better you will perform. Consequently, effectively segmenting your customer base is of paramount importance in order to meet their different needs and get the price that you deserve given the value you deliver. Your customers are not all the same, and that should be translated into your pricing strategy.
Reaching your ambition requires developing a price-setting model that operationalises your pricing strategy. The place to start is to understand what value your products or services bring to your customers and what they are willing to pay for them. Next, define your price list for your product or service range, in which the difference between the most basic and premium product versions should be clearly reflected.
Your sales teams need to understand why your prices are what they are, and should have a discounting structure with clear guidelines at their disposal. Train them to support their sales efforts and facilitate price-getting by providing them with sales playbooks with compelling value-based selling arguments.
Also, you can only expect to achieve your target if their sales incentives plan is aligned with your objectives. Make sure sales teams are compensated in a way that incentivises them to make the necessary extra efforts. Remember, you get what you pay for - in this instance, what you pay your people to deliver.
Ensuring you deliver on your expectations requires rigorous performance monitoring and an organisational set-up that allows your company to quickly identify roadblocks and take appropriate corrective action.
Gather a team dedicated to pricing and revenue management, and make sure it is equipped with the right analytical skills to track performance against your key performance indicators. This also assumes you have the right tools in place to manage your data, facilitate your price setting and getting processes, and visualise performance.
Next to that, put the right governance structure in place to catalyse pricing processes and steer your team toward achieving the objectives you have set. Roles and responsibilities should be clearly scoped, and an agenda of oversight meetings should be set.
We conducted a qualitative and quantitative assessment of their pricing maturity and identified root causes for margin leakage. This enabled us to prioritise initiatives and create a detailed roadmap and action plan to increase pricing maturity and reach an annual increase of €4.5 million in recurring EBIT.
We designed a detailed cost-allocation model, unlocking the ability to analyse profitability at stock keeping unit and customer levels. This profitability analysis led to the identification and documentation of improvement initiatives, as well as to the development of a new cost-plus price-setting model based on the true costs of products, and to a sales negotiation tool. With this new price setting model alone, our client now has the potential to improve their annual EBIT by €6-16 million.
Our pricing team defined a pricing strategy based on product-, customer-, and situation-specific value drivers and developed end-to-end pricing processes embedded in existing sales processes. On top of this, we selected the most appropriate pricing technology and defined an integration plan for our client.
Our client wanted to improve their tender management process in order to avoid any underperforming projects in the future. We helped by improving their project categorisation method, by defining a clear tender stage gate process, and by developing a model for management involvement depending on the category/type of tender. A full scope tender management process was ready at the end of the project. All templates and specimen documents for an immediate implementation were provided as deliverables, enabling them to quickly make better tendering decisions.
"The pricing and profitability quick scan conducted by PwC has enabled us to identify pain points and a considerable amount of quick wins for one of our business units. Based on their qualitative and quantitative assessments, we received a clear 1-year action plan with the initiatives we could implement to reap the identified potential. This was complemented with a detailed project charter for each of the prioritised initiatives, clarifying the key resources and activities required to make it a success."
"The profitability management methodology and the Equazion® Solutions tool of PwC have enabled our sales organisation to optimise customer offerings and have positively impacted our EBIT by 1.7%."
“By using the Equazion® Solutions tool and methodology, we have successfully optimised our product portfolio.”