Newsletter Fall 2008 – vol. 1 no. 2
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In this issue…
In our last issue, we established the framework for performing price optimization to maximize long-term profit, by looking at the Customer Lifetime Value and the impact of pricing on the possible future outcomes. We also discussed how the “Price/Volume/Profit Tool,” a vital element for achieving Level 3 of the World-Class Pricing framework (www.pricingsolutions.com), links to this model. In this edition, we delve into the available margin pool and extract a number of factors that could affect future profitability from a pricing management standpoint. We believe the effectiveness of a pricing strategy has to be measured over the long term, and not solely by its ability to deliver quarterly, or even annual, profit and growth targets. Your business has an available margin pool (the total available margin that customers are prepared to generate in a given segment over the product life cycle). The objective of the pricing strategy is to capture as much of that margin pool as possible.
Turbulent Times for Pricers Continue Things are not getting easier. In our last newsletter, I predicted continued volatility and high energy prices. However, this has hit with an even greater severity than I anticipated. As a result, companies are executing price changes at an alarming rate and to an extent not seen since times of high inflation. DOW has announced an across-the-board price increase in the neighbourhood of 20%; airlines are adding hefty fuel surcharges; and most other companies are looking to price increases for relief.
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At Pricing Solutions, we are committed to the ongoing education and development of market research professionals in our specific area of expertise – pricing research. In response to numerous requests for more information on this subject, we introduce an initiative designed specifically for market research professionals. Over the next several months, we will be broad-casting a series of free pricing e-bulletins. Each e-bulletin will be a concise summary of practical and relevant research methodologies. The e-bulletins will cover the essentials of pricing research as well as topics of current interest, enabling you to satisfy your internal clients more effectively and helping you to make more profitable pricing decisions. To receive our free PRICING FOR RESEARCHERS e-bulletin, please call Greg Thomas at 416-863-0685, ext. 120; or e-mail him at: gthomas@pricingsolutions.com.
Price Clippings At Pricing Solutions Ltd., we are committed to keeping you informed of new and innovative pricing issues and trends. Therefore, we introduce you to “Price Clippings,” an initiative planned specifically for Pricing Solutions’ clients. Over the next several months, we will broadcast a series of electronic “Price Clippings” to provide you with a timely snapshot of a range of pricing challenges European firms face. Each “Price Clipping” bulletin is designed to be a concise summary of the latest pricing issues and trends in various industries. To receive “Price Clippings” electronically, please call Madeline Stein at 416-863-0685, ext. 141; or e-mail her at mstein@pricingsolutions.com.
Get ‘LinkedIn’ to Our Pricing Club We are happy to be hosting an online community of pricing professionals through www.linkedin.com. Please go to the following link to put in your two cents on the discussion at hand: http://www.linkedin.com/groups?gid=127106 Read our blog at: http://pricingandvaluestrategies.blogspot.com/ and email maltosaar@pricingsolutions.com if you would like to contribute articles.
Pricing Solutions Ltd. (Associated with The Advantage Group International, Inc.) specializes in 4 core services: pricing research, pricing management, pricing training and advisory services. Under the leadership of President Paul Hunt, Pricing Solutions has grown exponentially since its inception in 1994. We now have offices in US, Canada, France, Portugal and Spain. Our Pricing expertise is based on more than 20 years of in-depth work on pricing optimization in B2C and B2B markets. We have developed a wide range of proprietary tools, processes and research techniques for studying and analyzing our clients pricing problems. The typical payback on an engagement is 15:1. We have been privileged to work with many of the world’s leading companies and are proud of the long-term relationships we have built with them. Many of our client relationships extend back to the launch of the company. Our philosophy includes the following: the senior managers who sell the work are also the people who do the work, collaboration is at the heart of our approach to completing successful projects and long-term relationships are the key to our business’ success.
Office Locations Toronto (Canada) Paris (France) Madrid (Spain) United Kingdom
FOR MORE INFORMATION or to provide comments or suggestions on this newsletter, please contact Mark Altosaar at maltosaar@pricingsolutions.com or visit our website at www.pricingsolutions.com |
