The right pricing structure can have an impact on profits far beyond what increasing sales or cutting costs could have. Yet with almost all of our engagement, we see that businesses leave money on the table because they don’t have the right pricing structure in place.
Whether startups, new companies or companies operating in new categories can adopt disruptive pricing strategies that define their business model. This approach can lead to more value by unlocking customers and suppliers through a new model that reduces the downside risk and increases the upside for all parties. For example, such models include profit sharing cost-of-materials triggers, as a service as opposed to capital investment, etc.. However, to succeed with this pricing strategy, companies need to conduct in-depth analysis and model dynamic scenarios to measure and optimize parameters for optimal returns. In addition, reactive measures needs to be built-in to the model on how to manage the downside when competitors respond and when copycats follow through. Companies can gain substantially by disrupting the pricing models, but sustaining the advantage has to be planned in advance by modeling all scenarios.
Other pricing strategies could be incremental in nature and focus on growing revenue by changing prices as an enabler to bring in more business. This includes strategies such as introductory promotional offers, freemium subscription models, product bundling, small regular price increases, defending against unnecessary giveaways, segmenting offering, applying surcharges, passing on changes in cost to serve, and pricing in additional sources of value etc..
Success in this model requires maintaining profitability by keeping churn low, monitoring customer acquisition costs, and reacting to competitive dynamics to avoid price or share wars and keeping clear insight into margin leakage and relentless discipline in rectifying the issue.
- We have a deep understanding of pricing strategy. Our world-class approach takes you from discovery to action with a capability assessment and a rapid diagnostic to identify your opportunities across value drivers, and defined initiatives that target the highest-ROI areas
- We develop analytics tools to screen for price potential, identify price leakage, uncover unjustified price variability and assess your internal pricing options
- Working cross-industries, we identify critical steps you can take to transform your revenue growth management capabilities and boost your pricing power an increasingly disruptive market
EGNYT’s approach is grounded in the following guiding principles:
- Putting People First: Organizations don’t change, people do. To get results, employees must take ownership. Therefore, we help you identify the vital behaviors that drive results, and reinforce them with positive feedback and we help you invest in coaching to develop individual capabilities
- Crystalize Vision: The vision will need to inspire deep commitment. We help you develop a clear vision while ensuring leaders are aligned on and committed to it.
- Proof of Concept by Creating Immediate Value: Transformation plan will need to be realistic and have quick wins. We help you ensure that the organization is able to implement change and establish a governance structure to ensure efficient decision-making and management mechanism to measure progress and capture value
- Sustainability of Change: We help you establish the organizational enablers and adapt the process and technology to support the change. Build-in a feedback loop and response mechanism to ensure enduring results.