PRICING
"We can improve the price or we can increase the sales volume. We can't do both at once."
Opinions like these are typical of traditional pricing methods. But the strange thing is, why do so many high-price companies command such high market share, why are they often even the market share leaders in their industry? How is it that Volkswagen (automobiles), Dr. Oetker (frozen pizza), Nestlé (convenience food), Procter & Gamble (Valensina, Wick, Pampers), ebay (online auctions), Apple (smartphones), and many other market share leaders manage to push through such high prices?
Doesn't this contradict the economic theory of the price-demand curve, under which high demand goes hand in hand with low prices? Is the theory wrong? It is still in the textbooks, after all.
Professional pricing provides the answer to these questions. Professional pricing is what enables companies to tap the massive profit potential that many simply allow to go to waste out of a lack of awareness of the methods.
After all, which measure, all other things being equal, has the biggest impact on profits: a 1% reduction in costs, a 1% increase in volume, or a 1% improvement in price? The latter, of course, given that it affects revenues as a whole (unlike cost reductions) and goes into the margin in full (unlike volume increases).
KEYLENS has spent many years helping companies along the path to professional price management; we empower marketing and sales managers to recognize pricing potential and to leverage it. It's not uncommon for such projects to achieve profit improvements in the order of several percentage points within a few short months and to do this sustainably and annually thereafter.
Some of the aspects our consultancy focuses on:
- Pricing audits and workshops on recognizing potential
- Sales training
- Negotiation training
- Developing and implementing new pricing models
- Competitive edge strategies/how to behave in a price war
- rogramming pricing tools and equipping pricing experts with the necessary "toolkit": reporting, analysis, and implementation
- Quick win projects with a focus on rapidly improving price and leveraging potential
SELECTED KEYLENS PROJECT EXAMPLES
E-mail provider
E-MAIL PROVIDER
Issue:
Price optimization
Objective:
Developing new pricing methods in a market characterized by massive price erosion
Results:
- We quickly removed internal obstacles to billing optimization
- Converted absolute discounts to incremental ones
- Introduced a new pricing model with just four instead of the previous 17 pricing elements
- Focused the new pricing model on services instead of volume
- Improved the bottom line by eight percentage points p.a.
KEYLENS success levers:
Application of successful case studies involving comparable challenges (best practice benchmarking).
