Pricing
Audit
“However beautiful the strategy,
you should occasionally look at the results.”
- Churchill

The Pricing Diagnostic (TPD)
focused on building a common vision and a clear path for pricing improvement. The
process has been developed based on more than 20 years of pricing experience.
The output of the process is a Scorecard (see on the following page),
recommendations, direction and guidance for moving forward.
objectives:
Assess current performance of pricing versus best practices.
Build a clear vision of how to increase pricing effectiveness
Identify how to leverage existing transactional information
Identify the highest leverage pricing opportunity
issues TPD will provide guidance on include:
•recommendations for improving pricing in the short, medium and long term;
•a list of “quick hits” to achieve growth objectives;
•identification of “leaks” in the pricing process that can be repaired to grow revenue;
•evaluation of how current customer information can be used to enhance pricing
effectiveness;
•Identification of gaps / weaknesses in client / Pricing or competitive intelligence & ways
of remedying them
February 13, 2007 Page 2

WORLD CLASS PRICING
PROCESS MATURITY
L
Excellence
5
E
WORLD MATURE V in <1% of companies
CLASS PROCESS E
L Execution
L Optimization
4
E
Optimization V Processes <10% of companies
Tools E
In Place
L
L
Price/Value Value
3
E
Analysis V Processes 20% of companies
E
L In Place
L
PROCESS
Internal
Gain
2
E
Control
V Process 40% of companies
MATURITY
E
L In Place LEVELS
L Baseline
1
E
V Process is 30% of companies
E
L Ineffective

PRICING PROCESS FLOW
P1 P2 P4
P3
Develop Set Monitor
Manage
Pricing Customer Pricing
Pricing
Strategy Prices Performance
• Conduct Value • Finalize Menu • Communicate • Measure
Analysis Offerings Price/Value Performance
• Cost, • Finalize Menu • Obtain • Review
Competitive Tiers Approvals Performance
Analysis • Assess • Update Master • Make
• Develop Customer Data Adjustments
Strategic Impact • Manage
Segmentation Transactions
• Develop Pricing • Manage and
Strategy Control Pricing
• Assess viability Process
of strategy

Provides a detailed audit of each
key pricing process…
World Class Pricing - Pricing Diagnostic
World Class Pricing • Examines more than 40 dimensions of pricing
Pricing Diagnostic
process performance, and benchmarks them
against relevant norms.
Company Cost Competition Customer
Policy Incremental costs Competitive intelligence proc. Research • Drills into the detail of each dimension to gain
Training initiatives Margin analysis Discounting controls Price Band Analysis
an accurate understanding of current
Price change process Product line rationalization Long Term Perspective Value based segmentation
performance
Decision making process Terms and Conditions Competitive Signalling Value measurement tools
Key Performance Indicators Pricing Waterfall Art of Diplomacy Price fences
Roles & responsibilities Transaction level analysis Industry knowledge Buying process knowledge
• Concisely summarizes major issues and
Sr. Management roles Customer P&L's Bidding tools Price point optimization quantifies opportunities.
Compensation & Incentives Customization strategy Simulations Fairness & equitability
New product pricing Defection analysis
• Presents a plan outlining where best to start
Link to business strategy Price/Volume Model
1% mindest Yield management
and which opportunities will yield the best
Process Capability results.
Not Working/Non Existent
Opportunity for Improvement
Performing Well

… and concrete
improvement action plans
2
Cost to Serve Analysis
Best Approach:
World Class companies have an understanding of the direct, indirect and future costs
that are relevant to the pricing process
Cost analysis supports management decision making
Current Situation
Looking at just the raw food cost
Rarely considering backroom labour costs and RUA per item could even consider skill
level requirements (e.g. slow roaster added $9000/store + labour)
Use of food cost% driving behaviour that might discourage sales of higher dollar
margin/low percent margin items (i.e. ribs). “Can’t take a percentage to the bank”
Key Actions
Need for a true cost model: Raw Cost + Labor on top 25 food items.
Integration of accurate food costs within transactional database system (people unsure
who maintains the updates)

Assess the strengths & weaknesses
of your Pricing Infrastructure
People
• Skills, experience, mgmt style
• Resources and budget People
• Strategic vs. operational
Structure
• Reporting, authority matrix
• Roles
Objectives Process Structure
• Business objectives
• Key Performance Indicators
System
• Tools, Rules
• Data access, software
Process Systems Objectives
• Documentation
• Workflow, automation

Provides an actionable plan to
gradually improve your Pricing
Performance Long Term Action
6. Implement Pricing Execution software at
the EMEAC level, for configuration and
pricing mgmt, and uniform KPIs
Short, Medium & Long Term Action Vision
Medium Term Action 3 years
4. Develop a predictive tool for setting
contract prices based on recent bids and
competitive information
5. Harmonize processes across the
EMEAC, develop global pricing policies
Short Term Action 1 to 2 years
1. Roll out the recommendations of Project
Mont Blanc for segmentation, and event
horizon management.
2. Develop a pricing strategy by product family
utilizing Value Analysis, Pricing Guidelines and
Tools
3.Take a general price increase of 1$ to 3%
and support with an escalation clause in
contracts
0 to 1 year

Pricing & Value Consultancy
Created in 1993
Present in 10 countries
Research, Strategy, Implementation
Tought leader + state of the art tools
clients include Contact:
llecorre@pricingsolutions.com

Pricing Solutions – Range of services
• Client/Consumer Value Drivers research
Research
• Price change impact research
• Transactional analysis/ Modélling
• Client Value & Satisfaction studies
• Product potential & ‘Willingness to pay’
Strategy
• Client/Consumer segmentations
Pricing
• …..
Advisory
• Value Based Pricing
• Pricing Strategies & Tactics
• Competitive Pricing / Price Wars
Solutions
• Implementing Price Increases
Pricing
• Channel Pricing
• New Product Launch
• ….
• Sales Force Training / Motivation
• Support/ Training of Pricing / Marketing teams
Support
• Decision Suppoirt Systems
• Deplyment & management of ‘Test Platforms’
Management
• Product/Service Full Cost Analysis
• Pricing Process deployment
• Pricing & Competitive Intelligence &
Pricing
Benchmarking
• …..
• Development / Reinforcement of Pricing
Capabilities
Process
• Redéployment of Pricing Processes
• Management & optimization of ‘client conditions ’
• Multi-Channel Pricing / Pricing Corridors
• Change Management
• Value Propositions / Design to Price
• Pricing Software implementation
• …..