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Service Pricing Success Feat. Cliff Isaacson of Syncron

Service pricing is a key factor to success in after-sales service. Using the proper pricing strategy is a sure way to improve service pricing, so we partnered with Syncron to learn from an expert. We're proud to share insight from Cliff Isacson, Director of Pricing Solutions at Syncron, in this special blog post! But first... a bit about the author.

Cliff Isaacson:

Cliff Isaacson joined Syncron in 2018 as Director of Strategic Pricing. His specialties include technology product management, applied pricing and inventory optimization, analysis and operations research, enterprise software marketing and sales, SaaS, customer integration and technology implementation. Cliff earned his BS Computer Science from Northwestern University and MS Industrial Administration from Carnegie Mellon University.

Read the first part of Cliff Isacson's article, as found on the SYNCRON blog, below.

People inherently understand the value of good service. Who can forget a trip to Disney or a stay at a world-class hotel – their first truly outstanding experience where customer service went above and beyond? But who also remembers a truly bad service experience – whether it was heard from a friend or seen as a viral internet joke? The adage still holds true: one bad customer experience can negate the value of ten good experiences.

Price is a key success factor in service, particularly in after-sales. If you have ever had your car or computer repaired by the company you bought it from, then felt the frustration of finding the same repair service for a significantly lower price at another repair shop, then you know how important price can be. It can impact your loyalty to the brand, future purchases from them and your consideration of other options for future repairs and service. But it isn’t just anecdotal examples of service experiences that show the importance of good service. Service has become an increasingly important source of revenue and growth for manufacturers. Industry studies have shown that Original Equipment Manufacturers (OEMs) average 25 percent earnings before Income Tax (EBIT) on service, versus the 10 percent for new equipment. A Bain & Company benchmark survey even showed that service contributes an average of 22 percent of total revenue, but an average gross margin of 39 percent! Service revenue is expected to double by 2020, rapidly turning it into a growth engine for manufacturers and a source of revenue stability.

So, why do so many industrial goods manufacturers underinvest in service pricing?

I’ll admit, service pricing can be a complex problem to solve. Manufacturers need to manage a large assortment of parts across a broad spectrum of fast movers and slow movers, commodity parts and complex replacement equipment, unique OEM parts and simple parts available from multiple vendors. Then, there’s the added complexity from pricing across regions, channels, markets, customer types and a value chain that can span all the way from corporate, to the dealer network, to end customers. The traditional approach to pricing is a cost-plus methodology, a model that applies a markup after a part’s cost is determined. OEMs frequently hesitate to increase prices on these parts, given their already high margins compared to their finished goods, leaving behind untapped revenue and margin. High volume parts with lower negotiated or manufacturing costs end up with a lower price, frequently resulting in underpricing and lost margins and low volume parts with higher manufacturing costs get a higher price, resulting in greater competition. This paradox creates a self-fulfilling cycle of high prices and low sales, driving dealers and consumers to lower-priced after-sales substitutions, and OEMs to underprice services to drive part sales. A better pricing approach uses a value-based pricing methodology that considers the unique aspects of service parts. A McKinsey study recently recommended expanding OEM after-sales lifetime value by re-pricing spare parts more dynamically. With this data-based approach, OEMs can achieve 3-10 percent EBIT margin improvements from better pricing for the long tail of a service parts assortment – supported by an incredible 80% of service champions that employ value-based pricing models. To truly understand value-based pricing for service parts, it’s crucial to understand the differences in product lifecycles between service parts and finished goods. For an in-depth look at both typical product lifecycles and the associated service pricing, Cliff Isaacson shares more in the second published post on the Syncron blog!

Read the FULL SECOND - HALF HERE!

  Cliff Isaacson is a featured #PPSDALLAS18 Breakout presenter during our Spring Pricing Workshops and Conference event in Dallas, Texas!

(CLICK the image to Register)

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The San Diego Pricing Conference Recap #PPSSD17

An incredible time was had in San Diego during the 28th Annual Fall Pricing Workshops and Conference event! The standard two full-day Workshop series was an exciting time in pricing education, many first-time attendees raved about the lineup. Attendees filled Conference rooms throughout the day for interactive learning and were eligible to take a Workshop quiz that if passed will count towards a CPP Designation Credit. While there was no Workshop Reception this year, attendees soaked up the sights, tastes, and delights of San Diego and the Bayfront area! The perfect weather made for a great backdrop to socialize and explore the offerings of the city. We opened our Pricing Conference with amazing Keynote Speeches from pricing leaders at Fortune 500 companies including Laura Preslan of Microsoft (Paypal) Nancy Lucas (Cargill) The Sponsor Hall was busy for several days allowing attendees to mingle and interact with the leading vendors in the industry. The Giveaways weren't too bad either... attendees left with new iPads, Apple Watches, Amazon Gift cards and more!

View all of the #PPSD17 video clips by clicking the image below:

There were a few new initiatives launched during the Fall Conference as well. We held the first gathering of INFUSION: a pricing initiative committed to supporting diversity and inclusion for women & minorities in the pricing industry.

Click the image below to read the INFUSION blog post

A featured luncheon with a panel discussion was organized by executives and Infusion Group Leaders Nolwenn Godard (Paypal), Hillary Gretton (BD) and Susana Lopez (Medtronic). Attendees were engaged and open, sharing their professional experiences and personal hurdles. The event was a great success!

To take a look at the #PPSSD17 Infusion Video clips, click HERE!

 

We also hosted a Town Hall event - granting attendees a direct interaction with several of our Keynote Speakers.

The pricing experts spoke to specific strategy questions in (four) areas: Digital Transformation, The Role of Senior Executives, and Building Resources In Pricing.

View the full (and growing) Photo Album on our Facebook Page:

For an interesting spin on the Pricing Conference, we compiled Tweets into a story!

An extra special THANK YOU goes out to our excellent Team members, event staff, the outstanding staff at the Hilton San Diego Bayfront, and all of our Workshop Presenters and Keynote Speakers. We could not have pulled off such an event without your professionalism, dedication, and hospitality. Did you attend #PPSSD17? We want to hear from you! Leave your feedback below or visit our Facebook Page to share your feedback! Did you miss out and ready to plan for 2018? Here's a peek at where we're traveling next year. Click the image below to sign up for the Pricing Workshops and Conference Email List for our event notifications! Continue reading

We Celebrate 1000 CPP Alumni

We're excited to announce that we've awarded 1000 members their CPP Designations! We proudly celebrate the 1,000th CPP Alumni, Marianne Gynde, of Medtronic! The Professional Pricing Society (PPS) is pleased to announce our 1,000th Certified Pricing Professional (CPP). Marianne Gynde is a Senior Manager, Pricing of Contracting & Tender Management for Nordics, Baltics & Poland at Medtronic, and has earned the designation of CPP through her hard work and diligence. Based in Denmark, Marianne has been with Medtronic since 2004 and has joined the ranks of the best and brightest in Pricing.
“The CPP experience has been great. The program was professionally setup, and gave me new knowledge, new tools, and inspiration for how to do my daily job even better.The face-to-face training I was lucky to participate in has given me a broader network within my own country, and I now have peers in different industries that I can share ideas with, and get further inspiration.” - Marianne Gynde, Medtronic
Since 2003, individuals like Marianne have joined the elite designation of the Certified Pricing Professional and used their knowledge to impact the field of Pricing. The CPP certification program is the standard for advanced knowledge and expertise in the field of Pricing. Carrying this designation indicates knowledge and skills in pricing across industries, and is achieved through any combination of online courses and live workshops at our yearly conferences. The certification is maintained by completing 2 credits every 2 years after the initial certification. The re-certification helps PPS maintain the integrity of the program and keeps each alumni informed on current trends and best practices. About The Professional Pricing Society: The Professional Pricing Society (PPS) is a member association of professionals committed to distributing pricing expertise throughout the business world. We provide leading-edge pricing and revenue management best practices. PPS produces up to five major annual pricing conferences in Europe, North America, South America, and Asia. PPS also offers more than two dozen, full-day training workshops every year, taught by leaders in the pricing community. These workshops serve as the foundation for PPS’s Certified Pricing Professional (CPP) designation. For more information about the CPP Certification Program, please contact: Michael Tatonetti +1-770-509-9933 michael@pricingsociety.com Continue reading

Crapido: A New Responsibility Assignment Matrix

Why is there a need for CRAPIDO? Discover why one pricing professional strongly believes the industry can use another Responsibility Assignment Matrix. Businesses must clearly define roles, especially within pricing, and without organization, they become inefficient, ineffective, underperforming and a drain. CRAPIDO is a way to impart a bit of discipline into the current system. Learn more by clicking the article image below: What are your thoughts? Continue reading

Mastering Service-Parts Pricing With Jason Philip of Syncron

Goodbye Spreadsheets, Hello Profit Margins: Mastering Service-Parts Pricing

Listen as Jason Philip, Syncron’s Head of Expert Services shares how companies can master service-parts pricing to boost revenue in this #PricingPodcast

Leading manufacturers from around the globe are now optimizing their service parts pricing to deliver dramatic improvements to the top and bottom lines. Jason Philip of Syncron details how the right price, for the right part, in the right market, can drive service parts revenues up by 5 percent, while driving gross profits by 7 percent!

In this #PricingPodcast, listeners will learn:

  • Why service parts pricing is becoming the new profit lever
  • How leading companies are using service parts optimization to improve company performance
  • The quantitative and qualitative benefits of service parts price optimization

Click on the image to listen to the #PricingPodcast:

Pricing Podcast: how to master service-parts pricing About Jason: Jason Philip is responsible for implementing Syncron’s pricing solutions for the company’s customer base, working in global and complex environments. He has implemented solutions around the world, including North America, Japan, Jordan and Europe. Prior to joining Syncron, Jason was a product manager and designer for PTC (previously Servigistics). He received his Master’s Degree in Industrial Engineering from Georgia Tech in 2010.   To hear more incredible speakers and to learn pricing strategies directly from the experts, register for the 29th Annual Fall Pricing Workshops and Conference event in Dallas, TX! Continue reading

3 Points On Pricing Optimization Value

Price Optimization Value Blog Image All companies seek price optimization value in business strategies. Many companies utilize pricing in daily interaction but aren't getting the best optimization. Value pricing strategies are essential, especially as technology continues to rapidly change. These unique challenges impact pricing optimization:
  • Powerful Buyers
  • Intense Competition
  • Short Life cycles
  • Declining Price Curves For End Products
  • Complex Go-To Market Paths
  • A Historical Bias Toward Marketing Speeds & Feeds vs. Customer Benefits
These challenges are root of many frustrating pain points. Businesses must make accurate and timely pricing decisions, be effective in managing the processes required to make offers and execute them through internal systems without error, in spite of any challenges. fuel-innovation-tpa-blog Historically, companies have addressed value capture in three ways. First, most companies should start by creating and educating a small pricing team. Carefully craft a team with relatively little authority compared to the amount of revenue or profit they will oversea. Secondly, most companies should invest in pricing execution software that automates the quoting and pricing approval processes. Pricing automation is an important step to improve overall pricing strategies and to better track profits and losses. While both of these suggestions are essential to developing clear values to pricing optimization, neither effort drives direct behavioral changes to the business. This can dilute the results because administering an approval process without maximizing their true value-add. Collaborating with the sales teams to craft product and pricing solutions that meet customer’s needs, which provide the profit margins for the company, to fuel the engine. Third, companies often address value capture by focusing on the cost side of the profit equation. However, focusing primarily on cost can result in downward spirals of steps to find redundancies and extract concessions from suppliers. This mode of operation is not a sustainable because when all areas of cost improvement are exhausted, companies often turn to the R&D and product development activities that led to success in the first place. What are ways your company practices pricing optimization value? Please share in the comments below! Learn more about increasing value for your business at our 27th Annual Spring Pricing Workshops and Conference in Chicago, IL! Chicago Banner #PPSCHI 2.0 During May 3-6th hear directly from over 25 of the world's leading pricing professionals! Register your team TODAY! Continue reading

The Northeast Manufacturers Pricing Workshop - Jan 2016

Pricing Manufacturer's Wkshop 1.0

Pricing experts Adrienne Gordon and Lydia Di Liello are presenting the Manufacturers Pricing Workshop on January 29th, 2016!

This premiere forum for North East Ohio Configured Manufactures covers everything industry leaders need to know about the pricing landscape for 2016. Packed with unique strategies to maximize profits, learn more to get ahead of the competition!

Workshop Topics:

  • Custom and Configured Pricing Strategies (CPQ)
  • CPQ Technology
  • Raw Materials
  • Currency Fluctuations
  • Contracts
Friends of PPS and trusted pricing industry experts, Adrienne and Lydia have over 38 years of combined experience between them.

Register TODAY to take advantage of complex business strategies!

Both Lydia and Adrienne will be featured speakers during our Spring Pricing Workshops and Conference in Chicago, IL, May 2016! PPS Chicago 620x350 Web Banner E We highly recommend taking advantage of these opportunities! To learn more about the Configured Manufacturers Workshop please visit Pricingempowered.com or CapitalPricingConsultants.com. Continue reading

NEW Pricing Education Course: Organizing Pricing For Success With Stephan Liozu

Pricing Education PPS Online Education Course: Organizing Pricing For Success

with Stephan M. Liozu Ph.D, CPP

liozu

Check out the latest Online Course Offering!

Description: Organizations and their leaders often struggle to design the right organization architecture for their pricing function. They face issues on where to locate the pricing team, how to allocate the reporting responsibilities, how to engage cross-functional collaboration, and how to raise the intellectual capital in pricing. In the end, a lack of a good organization design combined with an inadequate culture leads to more frequent pricing project failures. Pricing practitioners and pricing leaders should pay close attention to these organizational and human dimensions of pricing in order to create the right team culture and the right pricing training agenda. This unique one-day workshop combines the latest science in pricing organizational design, in change management for pricing, and in socio-technical pricing capabilities. Participants will receive both theoretical knowledge and practical tips on how to set a successful pricing team and how to improve their collaboration culture with respect to pricing. Attendees Will Learn:
  • Various options to organize pricing
  • How to create a Pricing Council and a strategic weapon
  • How to create a collaborative culture between pricing, sales and marketing
  • How to leverage change management methodologies to drive pricing change
  • How to design and implementation a progressive pricing training program
About Stephan Liozu:

Stephan M. Liozu is a creator, a disruptor, a designer, a creator and an innovator. With over 20 years of experience in business, he has recently focused on design and creativity in value and pricing strategies. Stephan has worked for both Fortune 500 companies and family-owned business. He earned his CPP designation in 2009 and recently achieved the Prosci® change management certification.

Over the past few years, Stephan published academic articles in the Journal of Revenue & Pricing Management, Journal of Business Strategy, MIT Sloan Management Review, and Industrial Marketing Management as well as in the Journal of Strategic Marketing.

He has also written several articles on strategic pricing issues for the Journal of Professional Pricing and is a regular presenter at Professional Pricing Society conferences in Europe and North America as well as the Strategic Account Management Association conferences.

The co-author of Innovation in Pricing – Contemporary Theories and Best Practices (with Dr. Andreas Hinterhuber) published in the fall of 2012, he also authored “The ROI of Pricing” that will be published in January 2014. Stephan holds a Master’s degree in Innovation Management and earned a Ph.D. in Management from Case Western Reserve University. Stephan sits on the Advisory Board of LeveragePoint Innovation, 360pi, and of the Professional Pricing Society.

Register TODAY and take advantage of this Pricing Course!

Click HERE for a Full-List of available online courses!

For more information, please visit PricingSociety.com Continue reading
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