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Pricing Strategies Template & Framework| By ex-McKinsey

Go to www.slidebooks.com to Download and Reuse Now Pricing Strategies Template & Framework in Powerpoint | Created By ex-McKinsey & Deloitte Strategy Consultants.

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Pricing Strategies Template & Framework| By ex-McKinsey

  1. 1. Pricing Strategies Training & Templates By Ex-Deloitte & McKinsey Consultants
  2. 2. 22 Aurelien Domont Slidebooks Consulting Managing Director Ex-Deloitte “ Increase your knowledge and skills by using a simple and comprehensive Training created by Ex- Deloitte & McKinsey Consultants ” “ Engage your audience and show professionalism with Premium Powerpoint slides ” Objectives of this document “ Save weeks of work by re-using our editable Powerpoint templates ” Premium Business Documents
  3. 3. 33 Agenda Step 1: Increase your Pricing background knowledge • Why Pricing is critical? • Key figures to know • Key issues caused by ineffective Pricing management • Root causes of pricing issues • Estimated benefits of a Pricing management project • Key consulting firms providing Pricing Management services • Key questions Senior executives need to answer Step 2: Define the pricing maturity level of your business • Create a pricing maturity model • Identify your current pricing maturity level • Define your target pricing maturity level • Design a roadmap to go from your current state to your target state Step 3: Define your Pricing Strategy • Set up your Pricing Goal • Define key methods to reach your Goal and set up your list price • Apply discount to your list price Step 4: Make sure you avoid price war Additional reusable Powerpoint templates
  4. 4. 44 Agenda Step 1: Increase your Pricing background knowledge • Why Pricing is critical? • Key figures • Key issues caused by ineffective Pricing management • Root causes of pricing issues • Estimated benefits of a Pricing management project • Key consulting firms providing Pricing Management services • Key questions Senior executives need to answer Step 2: Define the pricing maturity level of your business • Create a pricing maturity model • Identify your current pricing maturity level • Define your target pricing maturity level • Design a roadmap to go from your current state to your target state Step 3: Define your Pricing Strategy • Set up your Pricing Goal • Define key methods to reach your Goal and set up your list price • Apply discount to your list price Step 4: Make sure you avoid price war Additional reusable Powerpoint templates
  5. 5. 55 Price is the fundamental interaction point between supply and demand PriceSupply Demand
  6. 6. 66 Price impacts both Demand and Supply Quantity Price
  7. 7. 7 Download Now the rest of this Document and 10,000+ Powerpoint and Excel Documents at www.slidebooks.com or by clicking anywhere on this page Download Now
  8. 8. 88 Key figures 3% Companies effectively managing, communicating, and enforcing prices today 300% Average ROI of a 3 to 6 months pricing management project carried out by a tier-one consulting firm Source: Kiewell and Roegner
  9. 9. 99 Ineffective pricing management will cause many issues Source: Kiewell and Roegner  Increased service costs  Increased price administration costs  Increased receivables write-offs  Wide price bands  Inaccurate quotations from field sales  Slow response to RFPs  Declining margins  Little correlation between volume and price  Product profitability lack of visibility  Lost market share  Excess / obsolete inventory  Low volume for new products
  10. 10. 1010 There are key common root causes of pricing issues Source: Kiewell and Roegner Lack of new technology Inconsistent or inaccurate data No clear owner of price & margin Price complexity Lack of Senior Project sponsor Pricing issues
  11. 11. 1111 A listing price can be break down in multiple components List Price Rebates Damaged Product Returns Segment Discount Customer Specific Inventory Unbilled Freight Payment Terms Order Size Discount Co-Op Advertising Trade Promotions Fixtures & Racks Pocket Price Each component represents an opportunity to improve margin
  12. 12. 1212 Reusable Powerpoint template List Price Pocket Price
  13. 13. 1313 Estimated benefits of a Pricing management project Example # Opportunity Total Book of Business Opportunity ($M) 2018 Margin Opportunity ($M) Ease of Implementation Low High 1 Adjust price based on demand $8 - 10 0.5 1 2 Create a new system providing more comprehensive pricing data $1 0.2 0.4 3 Reduce the amount of uncharged freight $1 – 2 0.1 0.2 4 Adjust price based on customer segment $1 - 2 0.1 0.3 5 Tighten price discipline on non-strategic customer $8 0.5 1 Total $18 - 22 1.4 2 Easiest HardestEase of implementation: Illustration
  14. 14. 14 Download Now the rest of this Document and 10,000+ Powerpoint and Excel Documents at www.slidebooks.com or by clicking anywhere on this page Download Now
  15. 15. 1515 Estimated benefits of a Pricing management project Template # Opportunity Total Book of Business Opportunity ($M) 2018 Margin Opportunity ($M) Ease of Implementation Low High 1 Insert your own text 2 Insert your own text 3 Insert your own text 4 Insert your own text 5 Insert your own text Total
  16. 16. 1616 A dozen Consulting Firms provide Pricing Management services Advise Implement Operate McKinsey Bain BCG Infosys Accenture IBM Capgemini BearingPoint Deloitte Consulting / Monitor PWC Ernst & Young Simon Kucher & Partners Software vendor, i.e. SAP
  17. 17. 1717 In his latest white paper, BCG identified 3 key questions Senior executives need to answer In best-practice companies, senior management chairs a pricing committee accountable for defining and managing the pricing policy, with a focus on the tradeoff between margin and volume. It includes all key functions, including sales, marketing, finance, sourcing, and operations, and meets at least monthly. Do you have a pricing governance body at the top of each division of the company? Best-practice companies effectively consolidate the information, derive the implications, and “operationalize” them into price changes. Does a pricing team prepare the data needed for decision making by the committee? Best-practice companies capitalize on and codify customer knowledge so they can price more astutely. An understanding of what customers value most, how their economics work, and how they will respond to price changes can be developed through advanced customer-exploration techniques. Do you know more than your competitors about your customers’ response to pricing?
  18. 18. 1818 Agenda Step 1: Increase your Pricing background knowledge • Why Pricing is critical? • Key figures • Key issues caused by ineffective Pricing management • Root causes of pricing issues • Estimated benefits of a Pricing management project • Key consulting firms providing Pricing Management services • Key questions Senior executives need to answer Step 2: Define the pricing maturity level of your business • Create a pricing maturity model • Identify your current pricing maturity level • Define your target pricing maturity level • Design a roadmap to go from your current state to your target state Step 3: Define your Pricing Strategy • Set up your Pricing Goal • Define key methods to reach your Goal and set up your list price • Apply discount to your list price Step 4: Make sure you avoid price war Additional reusable Powerpoint templates
  19. 19. 1919 Create a simple Pricing maturity model Basic Standard Advanced Leading 1Level 2 3 4 Percentage of Companies 20% 70% 10% <1% Description • Cost-plus or margin- based pricing • No pricing market analysis • No pricing competitive analysis • Barely any pricing data • No resources exclusively allocated to pricing management • No forward-thinking pricing strategy • Prices respond to key market factors or inventory-driven lifecycle • Limited pricing market analysis • Limited pricing competitive analysis • Limited pricing data • A small dedicated team allocated to pricing management • Limited forward-thinking pricing strategy • Context-driven and managed life-cycle pricing • Robust pricing market analysis • Robust pricing competitive analysis • Comprehensive pricing data • A dedicated team allocated to pricing management • Good forward-thinking pricing strategy • Pricing based on predicted demand • Heavy pricing analytics coupled with clear execution accountability • Sophisticated pricing strategy involving multiple internal and external factors with a desire to test and learn • Anticipation of competitors reaction • Excellent forward- thinking pricing strategy Example of a Pricing maturity model
  20. 20. 20 Download Now the rest of this Document and 10,000+ Powerpoint and Excel Documents at www.slidebooks.com or by clicking anywhere on this page Download Now
  21. 21. 2121 Identify your current pricing maturity level Basic Standard Advanced Leading 1Level 2 3 4 Percentage of Companies 20% 70% 10% <1% Description • Cost-plus or margin- based pricing • No pricing market analysis • No pricing competitive analysis • Barely any pricing data • No resources exclusively allocated to pricing management • No forward-thinking pricing strategy • Prices respond to key market factors or inventory-driven lifecycle • Limited pricing market analysis • Limited pricing competitive analysis • Limited pricing data • A small dedicated team allocated to pricing management • Limited forward-thinking pricing strategy • Context-driven and managed life-cycle pricing • Robust pricing market analysis • Robust pricing competitive analysis • Comprehensive pricing data • A dedicated team allocated to pricing management • Good forward-thinking pricing strategy • Pricing based on predicted demand • Heavy pricing analytics coupled with clear execution accountability • Sophisticated pricing strategy involving multiple internal and external factors with a desire to test and learn • Anticipation of competitors reaction • Excellent forward- thinking pricing strategy Current pricing maturity level
  22. 22. 2222 Identify your target pricing maturity level Basic Standard Advanced Leading 1Level 2 3 4 Percentage of Companies 20% 70% 10% <1% Description • Cost-plus or margin- based pricing • No pricing market analysis • No pricing competitive analysis • Barely any pricing data • No resources exclusively allocated to pricing management • No forward-thinking pricing strategy • Prices respond to key market factors or inventory-driven lifecycle • Limited pricing market analysis • Limited pricing competitive analysis • Limited pricing data • A small dedicated team allocated to pricing management • Limited forward-thinking pricing strategy • Context-driven and managed life-cycle pricing • Robust pricing market analysis • Robust pricing competitive analysis • Comprehensive pricing data • A dedicated team allocated to pricing management • Good forward-thinking pricing strategy • Pricing based on predicted demand • Heavy pricing analytics coupled with clear execution accountability • Sophisticated pricing strategy involving multiple internal and external factors with a desire to test and learn • Anticipation of competitors reaction • Excellent forward- thinking pricing strategy Target pricing maturity level
  23. 23. 2323 Reusable Powerpoint template Basic Standard Advanced Leading 1Level 2 3 4 Percentage of Companies X% x% x% x% Description • Insert your own text • Insert your own text • Insert your own text • Insert your own text • Insert your own text • Insert your own text • Insert your own text • Insert your own text • Insert your own text • Insert your own text Insert your own text • Insert your own text • Insert your own text • Insert your own text • Insert your own text • Insert your own text • Insert your own text • Insert your own text • Insert your own text • Insert your own text • Insert your own text • Insert your own text • Insert your own text • Insert your own text • Insert your own text • Insert your own text • Insert your own text • Insert your own text • Insert your own text • Insert your own text • Insert your own text • Insert your own text • Insert your own text • Insert your own text • Insert your own text • Insert your own text • Insert your own text • Insert your own text • Insert your own text • Insert your own text • Insert your own text
  24. 24. 2424 Reusable Powerpoint template Basic Standard Advanced Leading 1Level 2 3 4 Percentage of Companies X% x% x% x% Description • Insert your own text • Insert your own text • Insert your own text • Insert your own text • Insert your own text • Insert your own text • Insert your own text • Insert your own text • Insert your own text • Insert your own text • Insert your own text • Insert your own text • Insert your own text • Insert your own text • Insert your own text • Insert your own text • Insert your own text • Insert your own text • Insert your own text • Insert your own text • Insert your own text • Insert your own text • Insert your own text • Insert your own text • Insert your own text • Insert your own text • Insert your own text • Insert your own text • Insert your own text • Insert your own text • Insert your own text • Insert your own text • Insert your own text • Insert your own text • Insert your own text • Insert your own text • Insert your own text • Insert your own text • Insert your own text • Insert your own text Current pricing maturity level
  25. 25. 25 Download Now the rest of this Document and 10,000+ Powerpoint and Excel Documents at www.slidebooks.com or by clicking anywhere on this page Download Now
  26. 26. 2626 Reusable Powerpoint template Basic Standard Advanced Leading 1Level 2 3 4 Percentage of Companies X% x% x% x% Description • Insert your own text • Insert your own text • Insert your own text • Insert your own text • Insert your own text • Insert your own text • Insert your own text • Insert your own text • Insert your own text • Insert your own text • Insert your own text • Insert your own text • Insert your own text • Insert your own text • Insert your own text • Insert your own text • Insert your own text • Insert your own text • Insert your own text • Insert your own text • Insert your own text • Insert your own text • Insert your own text • Insert your own text • Insert your own text • Insert your own text • Insert your own text • Insert your own text • Insert your own text • Insert your own text • Insert your own text • Insert your own text • Insert your own text • Insert your own text • Insert your own text • Insert your own text • Insert your own text • Insert your own text • Insert your own text • Insert your own text Target pricing maturity level
  27. 27. 2727 Identify a roadmap to go from your current state to you target state Create a small dedicated team allocated to pricing management Identify the key internal pricing issues and root causes Set an IT system providing heavy pricing analytics Create a robust pricing market analysis Define the pricing strategy for the year ahead January Dec Example of high level roadmap
  28. 28. 2828 Agenda Step 1: Increase your Pricing background knowledge • Why Pricing is critical? • Key figures • Key issues caused by ineffective Pricing management • Root causes of pricing issues • Estimated benefits of a Pricing management project • Key consulting firms providing Pricing Management services • Key questions Senior executives need to answer Step 2: Define the pricing maturity level of your business • Create a pricing maturity model • Identify your current pricing maturity level • Define your target pricing maturity level • Design a roadmap to go from your current state to your target state Step 3: Define your Pricing Strategy • Set up your Pricing Goal • Define key methods to reach your Goal and set up your list price • Apply discount to your list price Step 4: Make sure you avoid price war Additional reusable Powerpoint templates
  29. 29. 2929 Companies usually pursue either a Skim Pricing goal or a Penetration Pricing goal Source: Joel Dean HBR article entitled, Pricing Policies Skim Pricing Penetration Pricing Penetration pricing pursues the objective of quantity maximization by means of a low price. Skim pricing attempts to "skim the cream" off the top of the market by setting a high price and selling to those customers who are less price sensitive. Skimming is a strategy used to pursue the objective of profit margin maximization. 1 2
  30. 30. 3030 A Skim Pricing goal is more appropriate when: • Demand is expected to be relatively inelastic; that is, the customers are not highly price sensitive. • Large cost savings are not expected at high volumes, or it is difficult to predict the cost savings that would be achieved at high volume. • The company does not have the resources to finance the large capital expenditures necessary for high volume production with initially low profit margins.
  31. 31. 3131 A Penetration Pricing goal is more appropriate when: • Demand is expected to be highly elastic; that is, customers are price sensitive and the quantity demanded will increase significantly as price declines. • Large decreases in cost are expected as cumulative volume increases. • The product is of the nature of something that can gain mass appeal fairly quickly. • There is a threat of impending competition.
  32. 32. 32 Download Now the rest of this Document and 10,000+ Powerpoint and Excel Documents at www.slidebooks.com or by clicking anywhere on this page Download Now
  33. 33. 3333 To help you define your goal, it is important to identify where your product(s) is on the product lifecycle INTRODUCTION GROWTH MATURITY DECLINE PRODUCT EXTENSIO N SALES
  34. 34. 3434 To help you define your goal, it is important to identify where your product(s) is on the product lifecycle INTRODUCTION GROWTH MATURITY DECLINE PRODUCT EXTENSIO N SALES • The customers who buy products in the “Introduction” phase are called “Innovators” • These people buy new products with the belief that sooner or later these new products will significantly improve our lives • They are also known as technology enthusiasts, or “techies” • They represents 2.5% of the market • The customers who buy products in the “Growth” phase are called “Early adopters” • These people are often considered to be visionaries or revolutionaries, who want to use the discontinuity of any innovation to break from the past into a new future • They represents 13.5% of the market • The customers who buy products in the “Maturity” phase are called “Early majority” • These people are often considered to be pragmatists, who will only adopt a new product after a proven track record • They represents 34% of the market • The customers who buy products in the “Decline” phase are called “Late majority” • These people are often considered to be conservatives, who are very price sensitive, skeptical, and demanding • They represents 34% of the market Source of inspiration: Moore and McKenna
  35. 35. 3535 It is said there is a “chasm” to overcome in the “Growth” phase INTRODUCTION GROWTH MATURITY DECLINE PRODUCT EXTENSIO N SALES • This “chiasm” is a threshold that many new products fail to cross. Many new product are successful in selling to the Early Market. However, they never achieve the critical mass needed for mass consumer adoption. It is usually said that these products fell into a chasm. Source of inspiration: Moore and McKenna The “Chasm” Early Market Mainstream Market
  36. 36. 3636 Please see below a more comprehensive list of goals that you can select for your product Current profit maximization Current revenue maximization Maximize quantity Maximize profit margin Quality leadership Partial cost recovery Survival Status quo
  37. 37. 37 Download Now the rest of this Document and 10,000+ Powerpoint and Excel Documents at www.slidebooks.com or by clicking anywhere on this page Download Now
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Go to www.slidebooks.com to Download and Reuse Now Pricing Strategies Template & Framework in Powerpoint | Created By ex-McKinsey & Deloitte Strategy Consultants.

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