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"The Future Is Simple" By Stephen Haggett

"The Future Is Simple" By Stephen Haggett

The industry advancements including stakeholders and modern digital tools, have added speed, but often risk stripping judgement. When did it get so overly-complex?

Steve Haggett, VP Pricing & Revenue Management at Iron Mountain and writes on the importance of simplifying complex pricing processes. 

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A SaaS Pricing Guide By OpenView

Improving SaaS pricing strategies can be difficult without the right tools aren't in place. The best tools to update and improve a SaaS pricing strategy can be found in this new pricing guide by OpenView. Best practices in SaaS pricing have evolved over the years, so our friends at OpenView updated their classic guide to help practitioners stay ahead of the curve. It includes the latest and greatest SaaS pricing resources, as well as some timeless staples. The content is sourced from OpenView as well as pricing leaders including Price Intelligently, Simon-Kucher & Partners, OnStartups and Sixteen Ventures. Read the latest strategic suggestions for the industry in this blog post from OPENVIEW!

Click HERE TO READ the full blog post

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Revenue Management KPI's - PricingChat Recap

We held a #PricingChat - a live chat on Twitter - with pricing expert Avy Punwasee to gain insight on Revenue Managment KPI's. Peter Drucker said, “what gets measured improves.” It’s a simple concept that becomes infinitely more complicated when dealing with revenue management. In our experience, regardless of being B2B or B2C, most pricing metrics are underutilized. The lack of visibility and active management leads to lost sales and profit. In this #PricingChat with Avy Punwasee, we answered questions about revenue management KPIs that every organization needs to evaluate. About Avy Punwasse: Avy Punwasee is a founding principal of Revenue Management Labs, a boutique consultancy dedicated to realizing sustainable bottom line improvements through developing and executing innovative pricing strategies. With over 15 years of senior experience spanning pricing, strategy, and analytics, Avy has transitioned from being an in-house practitioner with large companies such as Anheuser Busch InBev, Ford Motor Company etc. to consulting for leading global companies.

View the full recap of the chat below:

Click the image to learn about the 29th Annual Fall Pricing Workshops and Conference event in Dallas, Texas and hear more on this topic in person! Continue reading

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!


  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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Tips To Improve Retail Pricing Management

One of the most difficult, yet key factors to successful business models is pricing. Retailers struggle to find the right balance between optimizing profits and maintaining traffic. There is a science to crafting a sound Retail Pricing Management strategy. Strategies must ensure retail businesses are well positioned to compete, so... tie the price to the value. Always. While companies should make price part of the offering, the prices must allow for competition within the market, not with the lowest price, which is easy, but with a good price that makes sense by allowing you to make the profit without killing volume. Our friends at Pricing Solutions tapped expert Fred Puech, director of pricing research and analytics to share four impactful strategies that will improve retail pricing management. Learn sustainable pricing strategies that develop healthy margins and good traffic. READ THE FULL ARTICLE from Pricing Solutions HERE. Continue reading

Unlock Six Sigma Pricing


Companies have the power to implement pricing capabilities needed for sustained profitable growth - Six Sigma Pricing. Navdeep Sodhi, Managing Director of Sodhi Pricing, is our featured guest blogger sharing expert advice on how to unlock potential in your business.
The State of Pricing Within every company exists a hidden pricing factory that holds the key to shore up customer trust, employee confidence, competitiveness as well as the pricing capabilities needed for sustained profitable growth. It is remarkable how far a little pricing discipline goes to make this happen. Instead, most companies seem to manage Pricing as a fixer-upper house where, somehow, external appeal take precedence over ongoing house-keeping and maintenance. For instance, exterior painting adds nothing to the dwellers’ comfort or to the value of the house if the water pipes inside are leaky or the electrical systems are out of code. Every company, much like the fixer-upper, needs external as well as internally- focused improvements, but one without the other or in the wrong order is simply wasted effort. The Hidden Cost Factory Thirty-plus years ago, manufacturers discovered a hidden factory for controlling overhead costs. Historically, overheads had been taken for granted in conjunction with labor costs. But when decades of increased automation shrank labor costs so much that overhead costs were exposed as a glaring 100-200% of labor costs. Companies decided that such a huge burden (ratio of overhead and labor costs) for maintaining waste was too large to be affordable or acceptable. This unleashed a wave of waste-elimination and continuous improvement efforts using quality tools like Lean, and Six Sigma which were adopted in non-manufacturing environments as well. The Hidden Pricing Factory Overhead costs are brought under control by reducing scrap, overtime, rework, overproduction, excessive inventory and such. The notion of higher quality at lower costs gets enthusiastic support from any organization. Interestingly, price execution also relies on repetitive operational steps or processes that need to work in tandem — efficiently and effectively. Pricing processes are prone to getting out of control because of all sorts of internal and external changes, such as changing customer needs, competitive moves, or regulation. Irrespective of industry, the hidden pricing factory is built upon ad hoc and short-focused pricing decisions, gut feel rather than analysis, and unclear roles and responsibilities which adversely impact customer loyalty and the company bottom-line. Therefore, continuous improvement tools used as cost control measures can also improve pricing execution. Pricing processes are prone to getting out of control because of all sorts of internal and external changes, such as changing customer needs, competitive moves, or regulation. Irrespective of industry, the hidden pricing factory is built upon ad hoc and short-focused pricing decisions, gut feel rather than analysis, and unclear roles and responsibilities which adversely impact customer loyalty and the company bottom-line. Therefore, continuous improvement tools used as cost control measures can also improve pricing execution. The Cause For Poor Price Execution Ironically, internal stakeholders on the revenue side seem to harbor divergent views regarding the hidden pricing factory. Whether minding the “invisible hand” of the market or self-serving agendas, they arrive at sub-optimal decisions that often sidestep company’s interests. Therefore, even when pricing strategy is sound, pricing execution fails to deliver to its full potential. For instance, offering one-off terms to customers which require manual intervention in every transaction make invoices error-prone and the customers upset. Since senior executives often approve such deals but get rarely involved in the execution, they remain unaware of such problems. This may explain the adoption of radical changes in strategy or organizational structure as their obvious choice when it comes to fixing pricing problems. Larry Bossidy, as President International at Honeywell and later its Chairman and CEO, recognized this in his book, Execution:
“My job at Honeywell International these days is to restore the discipline of execution to a company that had lost it. Many people regard execution as detail work that’s beneath the dignity of a business leader. That’s wrong. To the contrary, it’s a leader’s most important job.”
Why Six Sigma Pricing Given the added organizational complexity for pricing, continuous improvement tools, such as Six Sigma and Lean, need to be adapted accordingly. While the five phases of Six Sigma–Define, Measure, Analyze, Improve, and Control – remain as such, the definitions and scope can change. For instance, the definition of customer needs to reflect the goals of an internal business leader who champions process improvement. Hence, the name Six Sigma Pricing. As illustrated in my co-authored book and Harvard Business Review article, Six Sigma Pricing is not designed simply to be a statistical solution. It is more relevant as a framework for creating alignment between people, processes, and systems and to draw in leadership support. Whether a company has existing Lean or Six Sigma capabilities or not, there are tools for identifying root causes for prevailing problems and for prioritizing improvement actions. It is more relevant as a framework for creating alignment between people, processes, and systems and to draw in leadership support. Whether a company has existing Lean or Six Sigma capabilities or not, there are tools for identifying root causes for prevailing problems and for prioritizing improvement actions. Roadmap for Profitable Growth Companies can start by picking low hanging fruit rather than chasing impossible goals at the get-go. Cross-functional stakeholders team up to review evidence that supports setting shared goals and collaborating on execution. Thus illuminated, the once hidden pricing factory is now accessible through prioritized set steps on a roadmap. With careful consideration of failure modes, that is, pre-empting possible missteps, agreement on metrics for tracking and control, smart companies can achieve sustained profitable growth within weeks and months. Click to view the original post by Navdeep Sodhi. For more pricing education and to learn in-person at our Workshops and Conference, join us in Dallas, Texas this Fall for #PPSDALLAS18! Click the image below to learn more. Continue reading

Harnessing Big Data For Better Pricing Results

Pricing strategies, like big data, can be key to improving profits in business. According to a study conducted by McKinsey & Company, even a 1 percent price increase can translate into an 8.7 percent boost in operating profits (assuming no loss of volume). However, companies continue to fail to price their products and services appropriately, and as a result, take a hit to their bottom line. Watching companies lose revenue in this manner is particularly troubling considering the flood of data now available to assist businesses large and small. For those able to simplify big data's complexity, the reward is substantial. Now we're not suggesting leveraging artificial intelligence is easy. In fact, the explosion of digital customer touch points has made it quite challenging for companies operating in a range of industries to keep their price points on pace. However, by failing to uncover and act on the opportunities big data presents, many businesses are leaving millions in profit on the table. Want to know the secret to increasing your organization's profit margins? Harness big data to find the best price for your products and services. Is your business overwhelmed by big data? For example, if your company is comparable to Amazon, you have thousands of products to competitively price. As the company's pricing professional, it is your responsibility to help determine the optimal price a customer is willing to pay for those products. Maybe you've considered leveraging big data to gain insight into customer behaviors and market trends, but sifting through such a significant amount of data is overwhelming. Therefore, you continue using manual price-setting methods. We have all used manual pricing processes, but the problem is that these methods are tedious, time-consuming, and at times ineffective when compared to the robust analyses and lucrative cross-selling opportunities you can uncover with big data. With artificial intelligence, you can determine a consumer's specific needs, the value they place on particular products and use that information to equip sales representatives to close more deals. 3 Steps To Turn Big Data Into Profits If you're a part of a company that has massive product numbers, then getting comfortable with big data is critical. These three steps can help you get started. 1. Listen To The Data - With artificial intelligence you can analyze a consumer's purchases, predict their future buying decisions and use the data to price your product higher based on value consumption. By listening to the data, you can also analyze buying behaviors to determine the willingness of your consumers to pay X price for a particular product or service. 2. Embrace Automation - Analyzing price points for thousands of products is too expensive and time-consuming. By using automated systems, you can explore narrow customer segments, determine what drives value for each one and match your findings with historical transactional data. With automation, you can also replicate and tweak data analyses, so you're not starting from square one every time. 3. Collaborate and Communicate Regularly - Setting new prices is as much a communications issue as an operational one. It's important that your pricing team works with sales representatives to explain the reason behind price recommendations and to show them how you leverage a particular price. By doing so, your sales representatives will trust the prices enough to sell them to consumers. Equally important is developing clear communications plan to provide a pricing rationale that highlights product valued and then tailoring those arguments to the customer. Bottom line: to get the price right, we suggest helping your organization explore the advantages of big data to avoid suffering the high cost of lost profits. To learn exclusive tips on ways to prevent your organization from leaving millions of lost profits on the table, click the link below to learn about our Virtual University just for CPP Alumni!
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