In times of economic and political turmoil, having a comprehensive and agile pricing strategy is vital. Organizations that have not yet incorporated value-based selling and pricing intelligence into their practices are now urged to do so in order to adapt and capture market opportunities.
At the 2023 Manufacturing Pricing Excellence Virtual Academy hosted in September, we discussed the importance of pricing transformation, the main drivers behind it, and step-by-step approaches for developing profitable, sustainable, and agile pricing practices within your organization. The online event featured keynote speakers from Goodyear, Schneider Electric, Ducker Carlisle, and Airbus, and focused on three main areas:
- 1 — Pricing intelligence is the key to pricing excellence
Value-selling has become a buzz-term and growing trend in the industry in recent years, but it has never been more important than now to sell based on value rather than just cost. However capturing the value a business offers to its customers requires a unique set of tools and techniques—all of which rely on factual information and intelligence. This makes data mining a vital element in the pricing process. Without it, you can’t understand value. If you don’t understand value, you cannot set the right price for your product or service, and subsequently, you can’t sell that value. A value-based pricing framework is thus necessary in every organization, and it should incorporate pricing objectives related to revenue, volume, and profits based on data.
- 2 — Navigating volatile market cycles with pricing agility
As the market experiences one of its volatile cycles—marked by imbalances between supply and demand, increased supply chain disruptions, fierce competition, inflation, and labor shortages—it’s important to establish sustainable and agile pricing practices that help navigate the current situation but also another volatile cycle in the future. Considering the trends of the past 18 months, which have seen more frequent price increases, internal pricing process transformations, and challenges in setting price ceilings and understanding customer willingness to pay, organizations must increase their focus on managing margins, upholding pricing credibility, and identifying growth opportunities even as inflation rates slow down. Adopting a market-oriented strategy and assessing your pricing waterfall are instrumental in achieving that.
- 3 — Transforming solution benefits into added value
Waiting until the request for proposal (RFP) comes out to manage pricing is too late. If you want to harness the benefits of your solutions, it’s crucial to start ahead of time and focus on capturing value. But remember that pricing based on value doesn’t always guarantee a profitable business, so breaking down product prices into components is important as it improves alignment with competitors and facilitates communicating value. Likewise, introducing licenses that leverage solution benefits and tailoring the business case and value proposition to customer needs can help you prevent giving away value unnecessarily.
All this and more is now available on demand for your convenience. Thank you to everyone who attended and made the 2023 Manufacturing Pricing Excellence Virtual Academy a true success!