Strategic Pricing Associates (SPA) Pricing Program Overview Jan-2014

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Information about Strategic Pricing Associates (SPA) Pricing Program Overview Jan-2014
Business & Mgmt

Published on February 28, 2014

Author: StrategicPricingAssociates



We work with your team to think strategically about pricing; segment your markets; analyze your invoice data; and rebuild your pricing structures to maximize your profitability. We help you build the guidelines and process metrics to ensure effective execution. We help you train your sales force in the practical and cultural dimensions of this process.

SPA Pricing Program  90-Day Review of All Pricing Elements  Focus on Impact:  New List Prices  Distributor Discount Structures  Rebate Programs  Direct Customer Pricing  Diagnostic Interviews to evaluate current effectiveness and gaps, strategic opportunities  2-4 Weeks of IT, Staff Time Copyright 2013 Strategic Pricing Associates, Inc. 50

SPA Pricing Program  Training in Strategic Pricing Principles and analysis of actual pricing practices to develop new price structures to improve profitability  Each business unit submits 12 months of invoice data to SPA for analysis to develop recommendations at the customer/sku level and to profile product sensitivity  2 Training/Implementation meetings; plus sales force and process training  Team Participants   General Manager, Head of Sales, Marketing, Product Mgt   Division Pricing Manager   Divisional I/T Copyright 2013 Strategic Pricing Associates, Inc. 51

Strategic Pricing Workshop Structure Workshop I Quick Wins & Data Set-Up • Shipping & Handling • List Price Cube • Rush/Small Order Premiums • Clean up and standardize price files • Prepare for indexing account review • Sales rep education preparation Workshop IIA Workshop IIB Workshop IIC Standard Pricing Structure Exception Pricing Structure Process Management & Sustainability • Set pricing standards by customer type/ size combination per product family • Divide product families into Core vs. NonCore • Larger Accounts • Customer/SKULevel RecCommendations Copyright 2013 Strategic Pricing Associates, Inc. • Set standards for sales force to sell value and manage prices • Pricing Metrics • Customer Index • Rep Index • Continuous Improvement •  Generation II Concepts 52

Thoughts About Pricing •  •  •  •  •  •  •  Pricing is a “contact sport”; if your uniform isn’t dirty, you weren’t in the game Don’t build your strategy around your exceptions: the best policies will have exceptions; the key is to manage/limit them The optimal level of pricing complaints is not 0; otherwise you are not pricing to resistance Use data to make decisions Price pressure usually indicates a lack of differentiation between you and your competitors: What do you have to do differently to price to value? Focus on reducing the price sensitivity of your accounts over time You don’t have to be perfect to win Copyright 2013 Strategic Pricing Associates, Inc. 53

Next Steps •  •  Please visit the SPA website: Take A Free Pricing Opportunity Profile : •  •  Upcoming Free Events: Webinars held several times per month; check SPA website •  SPA Strategy Seminars •  Full-day seminars, held several times per year in cities worldwide; check SPA website Copyright 2013 Strategic Pricing Associates, Inc. 54

Calculating Pricing Potential in Your Businesses •  Gross Revenues, less: •  Fixed-contract pricing beyond 1 year •  Equals “Net Revenue in Play” •  Times Impact Percentage: •  1 percent: •  2 percent: •  3 percent: •  4 percent: low estimate conservative estimate good estimate excellent performance Copyright 2013 Strategic Pricing Associates, Inc. 55

Summary •  The current economy requires urgent action to develop a pricing architecture and compensating pricing layers •  Strategic pricing is a big opportunity for manufacturers and distributors, generally 2+% of revenue •  Can improve a company’s net profitability by 20% or more •  The drivers of the opportunity are clear •  To be effective, a pricing program needs to be data-driven, to translate strategy into actionable plans •  Long-term commitment; pricing czar; executive sponsorship; persistence; and channel engagement are keys to success •  Pricing is a specialized discipline where expertise has huge payoff in impact and speed of execution •  •  Cost plus mentality and sales rep discounting practices Complexity of product lines, customer base Copyright 2013 Strategic Pricing Associates, Inc. 56

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