Pricing Strategy
Pricing is far and away the most sensitive profit lever that managers can influence.”
- Michael Marn, The Price Advantage
Pricing projects are so much fun for us because our clients, whether they are $2 billion companies or $30 million companies, are always pleasantly surprised at the size of the opportunities for improving profits and cash flow through pricing. Even well-run companies with premium brand positions find that there are price leaks, customer value perception opportunities that had not been discovered before. A small 1% increase in price performance across the organization yields profit improvements equivalent to an 11% cost reduction. And pricing implementation doesn’t carry with it the risk associated with complex projects.
One simple reason that pricing strategy is such fertile ground in business today is that we have raised a generation of cost cutters. Ever since the end of World War II, management has focused on cost cutting. Cost focused training and projects have placed purchasing agents and others on the buy side at an advantage. This is occurring at a time when uncontrollable costs like energy are rising. Our clients are finding that it’s time to reassess, determine the true cost and value of our product or service offering and establish a fair price based upon the actual customer’s perception of the value of the product or service.
Below are some examples of activities included in pricing projects:
- Pricing opportunity assessment
- Discounts control audit
- Determining customer value perception and price threshold
- Identify and capture pricing leaks such as discounts, rebates, warranty, shipping costs, fuel surcharges, loyalty programs, and others
- Price increase implementation
- Pricing strategy development including all of the above and consideration of competitive position, cost structure, branding
Large Company Pricing Case Study
Small Company Pricing Case Study
“Since 1929, and through four generations, the Muskingum Iron & Metal Company has specialized in the processing and recycling of ferrous and non-ferrous scrap metals. Our success begins with our customers and their need to get the highest return for scrap. We never lose sight of the fact that they are the reason we are in business. GBQ Redbank Advisors is our consultant of choice because they recognize the needs and challenges that a successful, growing family business faces.”
Josh Joseph,
Vice President,