Summary
A category leader in industrial cameras for the North American market approached Revenue Management Labs to increase the number of conversion and sales opportunities for two premium camera product lines, External and Pan Tilt Zoom (PTZ). The industrial camera company recognized an industry-wide issue in communicating the value because of an overly complex pricing structure. Revenue Management Labs was engaged to implement a value-based pricing strategy for the company that included discounting, bundling, and improving sales communications.
Challenge
At the time of engagement, the industrial camera category had a wide range of brands, products, features, and pricing. However, comparison shopping was notoriously difficult for customers, since the feature range did not necessarily correlate to pricing thresholds. Additional purchase, leasing, and service options further compounded the perceived value complexity. The complicated pricing structure made it difficult for sales to communicate value effectively to the customers, to understand their value in comparison to competitors, and to maximize their sales opportunities by feature and price.
Solution
Revenue Management Labs conducted a comprehensive analysis of the price position of their two camera product lines, External and PTZ, and two main business lines, Enterprise and Core. The goal of the data analysis was to understand where the two camera lines stand in terms of similar offers from competitors. From that analysis, Revenue Management Labs developed a pricing strategy that aligned perceived value with price and positioned the two products competitively in their markets and in their business line, Enterprise and Core.
Five main recommendations were included in the pricing strategy:
- Reduce the number of different camera resolutions offered from 10 to six to reinforce premium position versus competition and upsize transactions.
- Restructure discount tiers to align price position with value and competitive landscape.
- Introduce volume discount to incentivize customer upsell.
- Reduce prepaid contract discounts and switch to “free months” to realize more benefit from customers.
- Restructure quote presentation to highlight “free months” and highlight value-adds and benefits.
