PCM combines best practice experience and sophisticated diagnostics to help optimise pricing of products and services, taking into account market dynamics.
Custom built models are developed and deployed, as part of a formal PCM engagement, to define target pricing by customer, product and service, in a form that leverages existing ERP systems and is consistent with existing pricing structures.
Based on our experience in developing and implementing successful Pricing Programs, we believe the following considerations must be taken into account, prior to implementation :
- Pricing / discount tiers that reflect customer commitment in terms of volume, margin, cost to serve, share of wallet, growth potential, etc. that are objectively assessed.
- Target pricing based which can be applied at can be applied in several levels of granularity, to maximise margins.
- Customers in end-use markets with similar pricing structure and relative consistency.
- Existing customer price structures that do not match target pricing – and required subtle changes over time.
- The profit upside derived from Pricing Optimisation, based on pricing policy consistency and discipline. These include defined pricing structures, delegation of authority and migration plans (to target pricing), which are understood and supported by the field sales team.
- Variations (profit leakage) from the defined pricing matrix for individual customers, products and services, which drive field sales team priorities.