The Big Picture

North America’s competitive Industrial Camera category features wide-ranging brands, products, features and pricing. However, feature range doesn’t necessarily correlate to pricing thresholds by brand, making comparison shopping for customers a challenge! Additional variables related to purchase/lease of products and services further compound pricing and perceived value complexity i.e. Monthly services and Pre-Paid contract options. It was only time before a category leader approached us with a crystal-clear goal: Ensure their premium pricing points opened maximum sales opportunities relative to competition by feature & price.

RML was engaged to help the partner achieve top conversion and sales opportunities for their External and PTZ Cameras by:

  • Establishing a value-based price list for camera’s, services and solar-units
  • Optimizing discounting guideline(s) by product group, sales channel, and # of camera’s purchased to increase transaction value
  • Establishing bundle pricing to incentivize upsell opportunities
  • Amending quote structures/presentations to highlight the incremental value provided

Pixel By Pixel: The RML Approach

1. Foundation Analysis

What is the current sales process? Are there opportunities or gaps? What are the value differentiators?

2. Ecosystem

What does the customer journey look like? What is the key value differentiating attributes? How does price compare to competitors?

3. Price Versus Value

What is the value trade-off versus competitors? Where does pricing leverage exist within each customer segment?

4. Market Offer

Which offerings meet customer needs and willingness to pay? How can the offers be adjusted to increase marketability?

1. Foundation Analysis

Rate Mix (Figure 1) broke down all the revenue levers in the business to help the partner understand which levers generated / destroyed revenue. Sales, segment mix and volume increased by $9.5M. But due to excessive discounts and an unfavorable product mix of $3.9M, the company only netted $5.6M.

Other key insights from the rate mix include:

  • Discount: Certain products were given ad-hoc discounts, driving negative impact, and requiring discounting guidelines
  • Segment Mix: Most purchases were in the higher value segments and sold at higher prices than the company benchmark, requiring a focus on high profit/high revenue segments
  • Product Mix: Monthly services had a higher price but were losing share while Prepaid Contract services had a lower price but were increasing share - an opportunity to drive mix away from Prepaid Contract Services to Monthly services
Premium Pricing - Rate Mix
Figure 1: Rate Mix

2. Ecosystem

ZOOM IN & PORTRAIT VIEW

In addition to Rate Mix, we conducted an in-depth business audit to uncover insights on the partner’s segments, sales strategy and offerings. We found:

  • The partner had 2 main lines of business, Enterprise and Core, warranting 2 unique pricing strategies
  • Lease was growing in importance due to convenience, shorter project durations and lower # of cameras per project, providing an opportunity to realize more value on leases
  • Inherent value in the video cameras due to a growing need for live feed, indicating greater pricing leverage
  • Contract prepaid was growing in importance as it provides increased convenience and has deeper discount options. There is an opportunity to adjust discount structures to provide less benefit for upfront payments
  • Inherent value in the form of convenience when no power was on site, indicating an opportunity to create bundles and take a price increase on solar-leases
  • Incentive to purchase additional cameras by offering volume discounts

 

ZOOM OUT & LANDSCAPE VIEW

RML conducted a comprehensive competitive review of the partner’s current market environment. In this review, we examined brand identity, brand expression, brand messaging, offerings, content, and website analysis. We found:

  • The messaging across the vendors varied

  • The partner had 3x more customer support than the competition, cementing their white-glove service
  • The partner did not allow public access to its live-video demos, ensuring one-on-one customer engagement and enhancing conversion probability
  • The partner had more overall content but lagged in # of case studies, weakening the perceived applicability of their offerings across industries
  • The partner had the greatest number of software integrations compared to competitors

Next, we conducted customer feedback / reviews, exploring brand / product value attributes, product design / features, customer support, reliability, ease of use, PM Integration, and Price. We found:

  • All the respondents cared about: Customer Support, User Interface and Reliability / Quality
  • Time-Lapse, Resolution and Pan-Tilt-Zoom (PTZ) were Table-Stakes in the market (all players offer them)
  • A small percentage of respondents pushed back on price, saying they were more expensive than the competition
  • Software Integration was also mentioned as a key factor in selecting a camera vendor
With the last attribute, Price, we conducted a competitive price position analysis (Figure 2) to see how the partner’s services and cameras compared against the competition:
Premium Pricing - Offerings
Figure 2: Competitive Price Position Analysis

External Cameras

  • Their camera list prices were 71% above the competitor for a similar resolution
  • Their services list prices were 101% above the competitor for a similar resolution
  • The price differential reduces on discounted prices, but they still command a premium price

PTZ Cameras

  • Their camera prices were 54% - 63% above the competitor for a similar resolution
  • Their service prices were 143% - 150% above the competitor for a similar resolution
  • The price differential reduces on discounted prices, but they still command a premium price

3. Price Versus Value

Based on both the internal and external analysis, we were able to create 4 Value Maps (Figure 3) for both the Enterprise and Core segments based on the two price attributes (List Price and Average Discount). The value maps focused on the 4 key value attributes customers ranked as the most important to them (Customer Support, User Interface, Reliability / Quality, and Project Integration).

From an Enterprise Segment perspective, the value map revealed the partner to be value advantaged, which indicated an opportunity to increase prices. From a Core perspective, the value map revealed the partner to be value disadvantaged, indicating a need to increase discounts slightly.

Figure 3: Value Maps

4. Market Offer

1. Simplify Resolutions from 10 to 6 offerings to reinforce premium position vs competition and upsize transactions

2. Restructure Discount Tiers to correct price position against competition based on value

3. Introduce Volume Discount to incentivize customer upsell

4. Reduce discount of Prepaid Contract and switch to “Free Months” to realize more benefit from customers

5. Restructure Quote Presentation to show “Free-Months” and show case value-add/benefits

 

Example: Simplify Resolutions

We found the partner offered lower resolution cameras versus the competition (4MP & 6MP versus 5MP). Since customers perceived higher resolutions to be of better quality and were willing to pay a higher price for them, we eliminated the lower resolution offerings to establish the 8MP resolution camera as a premium offering (Figure 4). This was further supported by the fact that the lower resolution cameras had lower revenue minimizing revenue risk.

Figure 4: Simplify Resolutions

Results

+79% Revenue in Core Segment
+21% Revenue in Enterprise Segment

Transitioning to a value-based pricing strategy and refining offerings, discounts, and payment terms resulted in a significant increase in revenue for both segments. RML helped the partner realize that they were leaving money on the table by not leveraging their value position. This insight led to a whole new approach to driving growth through price optimization.