Optimal pricing is the number one lever for driving profitable growth. In fact, for an average S&P 500 company, a 1% increase in price results in an 8% increase in operating profit – which is 3.2x more effective than reducing cost and 2.2x more effective than growing volume.
Unfortunately, pricing is not a priority for most companies. In fact, 70% of companies spend 10 hours or less annually on strategic pricing, often due to a lack of pricing knowledge, overreliance on tools, business complexity, industry elasticity and more. As a result, most companies rely on cost-plus pricing or a pricing software with simplified pricing algorithms to get the job done.
Without an adequate pricing strategy, companies suffer from:
- Non-optimal pricing based on cost or margin targets
- Inability to pass price increases onto customers, leading to shrinking margins
- Pricing structures that undercut the integrity of your brand and channel partners
- Unsatisfied customers resulting in missed revenue opportunities
- Sales teams spending more time on pricing than selling
Revenue Management Labs takes a balanced approach to pricing by evaluating your customers, competitors and financials. By considering all three perspectives, our team of pricing consultants delivers a unique price strategy that drives sustainable revenue growth.
Our engagements have helped clients:
- Set prices based on value to generate more revenue and profit
- Develop optimal price structures to eliminate customer and channel conflict
- Establish robust pricing processes to streamline pricing approvals
- Implement strategic price adjustments to deliver optimal results
- Provide real time pricing guidance to help sales teams close deals
1. Data Acquisition
Acquire all data streams and analyze for completion and accuracy
2. Baseline Definition
Review and define business metrics and develop hypotheses on opportunities
3. Analysis & Modelling
Asses internal external environment to find value drivers & price leverage
4. Simulation & Forecasting
Simulate the financial impact of the pricing actions undertaken
Train sales team with supporting selling material to ensure customer buy-in
Define roles and responsibilities related to new pricing structures
7. Tracking & Reporting
Facilitate post-ROI analysis of actions undertaken to ensure return on investment
Our team of Revenue Management and Pricing consultants will guide you through every step of the process to ensure a custom solution that caters to your specific needs. To create a value-based pricing strategy to maximize your company’s revenue, contact Revenue Management Labs today for a free consultation.