Pricing | The Neglected Lever of Growth and Profitability
Of all the investments an organisation can make, very few are more effective at driving growth and operating profits than those in Pricing Strategy, Pricing Research, and Price Optimisation. And of course – Price Execution.
Since the Harvard Business Review paper of September 1992, repeated research has shown that a 1% improvement in price realisation typically delivers an 11% improvement in operating profits.
Yet companies continue to pour blood, sweat, and tears into making great products and services, consuming countless hours and scarce resources to bring in new customers, and work non-stop to retain existing customers.
And to this day many still fall short in dedicating a proportionate amount of effort to their most effective lever of growth and profitability; their pricing.
This misallocation of effort is difficult to explain. Perhaps it’s because pricing touches and impacts every single part of the organisation that it’s often difficult to grapple with and fully optimise.
Yet only optimised pricing and pricing architecture can fully monetise the value organisations bring to market.
Pricing | Rapid Payback and Enduring Benefits
In addition to its significant leverage on growth and profitability, a pricing initiative is often a better investment because of its rapid payback and enduring benefits.
The typical pricing initiative has a lower initial investment, a much earlier payback period, and a higher and more sustained benefit and ROI.
One more thing. As growth is more revenue and not just more customers; fully monetising an organisation’s customer base will be fundamental to driving organisational efficiency.
And since pricing has a foundational impact on per unit economics; it in-turn is a significant driver of organisational efficiency.
Initiatives | Pricing Strategy, Pricing Research, and Price Optimisation
We deliver this through an integrated set of pricing capabilities and initiatives that shape customer behaviour, drive revenue growth, and boost earnings.
Typical Outcomes | Pricing Strategy, Pricing Research, and Price Optimisation
With success, we’ve applied these capabilities and initiatives across B2B and B2C and across industries, pricing formats and architectures.
Our pricing capabilities and initiatives have a positive impact on key metrics such as revenue, margin, discount and rebate spend, and query-to-quote times.
Revenue 6% to 13%
Margin 12% to 35%
Discounts and Rebates 6% to 17%
Query-to-Quote Time 35% to 85%
One of the primary goals of our pricing initiatives is to lift the Price Satisfaction of our client’s customers.
This in-turn drives the willingness-to-accept of price increases by our clients and significantly reduces their customer switching and churn.
To explore how our Pricing Strategy, Pricing Research, and Price Optimisation methodologies can consistently deliver your organisation’s revenue and margin objectives please contact us.