This document discusses strategies for achieving optimal value pricing when negotiating with customers. It identifies 4 critical factors: 1) Understanding how pricing impacts profitability, 2) Quantifying and communicating the value of offers, 3) Building relationships with value buyers, and 4) Engaging or circumventing price-only procurement buyers. The document provides tools for assessing different types of buyers, quantifying value drivers, positioning solutions based on their value, and formulating value messages. It also discusses strategies for negotiating with different buyer types and overcoming challenges like being viewed as a commodity supplier.

1. Selling and Negotiating an
Optimal Value Price
Paul Hesselschwerdt, President at Global Partners
Focus: Global account Management, Value selling and Pricing and
Business Acumen – particularly focused on sales and marketing.
Michael Wolf, Director at Global Partners
Focus: strategic account analysis, planning and implementation, value
selling, leadership of global account teams, and building effective sales
organizations.

2. A Price Negotiation Legend

3. What is Value Price Optimization?
Achieving price levels that reflect the quantifiable
value that suppliers create for their customers
Value
Price

4. 4 Critical Factors
1. Understand and apply the dynamics between pricing and
profitability
2. Quantify and communicate the impact of the offer value to
justify a fair price
3. Create strong relationships with the specific buyers who
recognize the importance a good value offering
4. Circumvent or engage price-only procurement buyers

5. Increase Revenues
Volume
and
Price
Lower Costs
Cost of Goods Sold
and
Fixed Expenses
Higher Profit
Only ways to
drive higher
profit!
Financial Levers that Improve
Profitability

6. Price 100%
COGS 60%
Volume 40%
Which Factor has the Greatest Impact on
Profit Improvement?
Baseline data (yearly basis): # of units sold / yr = 1M, unit price = 100, Variable cost / unit = 60, Fixed cost = 30M
COGS = Cost of Goods sold
10% Improvement of… Causes profits to increase by…
Fixed
Costs
30%

7. Applying the Profit Calculator
Product Maturity
Competitive Intensity
Quantifiable Value
Buyer Profile
50% Target MarginEroders Drivers
New products
Highly differentiated
Mature products
Minimal differentiation
Value and Relationship buyersPrice-only buyers
Few competitors
Strong position against competitors
Difficult to demonstrate
compelling quantified value
Able to demonstrate compelling
quantified value (>25%)
Many competitors
Strong positions from competitors
-5 -1 +1 +5
-5 -1 +1 +5
-5 -1 +1 +5
-5 -1 +1 +5

8. 4 Critical Factors
1. Understand and apply the dynamics between pricing and
profitability
2. Quantify and communicate the impact of the offer value to
justify a fair price
3. Create strong relationships with the specific buyers who
recognize the importance of a good value offering
4. Circumvent or engage price-only procurement buyers

9. “My customer keeps pushing our products into a low value-added,
commodity status, even though we both know that this is not the case
and she only does this to keep the price down.”
Escaping The “Commodity Trap”

10. Show me
the
MONEY!!

11. Financial Results Area
Identify the areas we
can influence in the
Customer's financial
results
Revenue:
How do we enable the
Customer to increase
Revenue from new
technologies, products
or services
Financial Impact on
Select the specific
business results metric
you can influence
Price
Volume
Volume and Price
Financial Impact Map
Created by Value Drivers
Determine the specific
Value Drivers you can
address with your solutions
Better features in
customer's end product or
service;
Better performance of
customer's end product or
service
Increase customer's
capacity to fill orders
Shorter time to market on
new products and services
Customer Owner
Determine the person
or function at the
customer who is
responsible for this
Driver
VP Marketing/Sales;
Business Unit VP
VP Operations
VP R&D

12. Global
Capabilities
Value
Enhanced
Solution
Value
Core
Product
Value
Value Positioning Framework
Product/solution itself
creates the value
Competitively
differentiated
Technical Mgr.
Production Mgr.
Purchasing
Combination of services,
bundles, etc.
Customized solutions
Function Mgrs./
Directors
Partnership
Global scale
Senior Mgrs.
Business, Marketing
Execs

13. Formulating the Value Message
Value Message Starters - Example for Core Products
Our proposed solution will enable
your products to include
advanced features, which will
result in higher selling price.
Our proposed solution will enable your
products to include advanced features
, which will result in higher selling
prices and increased market share.

14. Formulating the Value Message
Value Message Starters - Example for Enhanced Solution
By including in our proposed solution value
added services, such as on-site support,
we can impact your down time,
resulting in higher yields.
By including in our proposed solution on-site
design support, we can improve your
design productivity, resulting in better
Time To Market.

15. Formulating the Value Message
Value Message Starters - Example for Global Capabilities
By providing access to our global
resources, such as regional
design centers, we can impact
your R&D capabilities.
By using our global supply chain,
you can expand your own
production capacity world
wide.

16. 4 Critical Factors
1. Understand and apply the dynamics between pricing and
profitability
2. Quantify and communicate the impact of the offer value to
justify a fair price
3. Create strong relationships with the specific buyers who
recognize the importance of a good value offering
4. Circumvent or engage price-only procurement buyers

17. “I have very good relationships with my customers but they think of me
only as a reliable supplier. I know I am missing opportunities because I
can't get to the people in the customer's organization who would really
appreciate the value that we could bring them.”
Building Relationships with Value
Owners and Buyers

18. J Volpe
EVP & COO
Bill Buttell
SVP, Development
Kim Kensill
SVP & CIO
Mike McKeon
SVP & CNO
Marcos Fragolni
EVP & CMO
Bill Newman
Director of Radiology
Mike Rhoads
VP, Operations
Tom Meylon, Asst. Dir.
Get Well Hospital
Lisa Hester
Manager, Clinical Eng.
Lilly Lorenzo
Dir., Materials Services
Bertus Geldenhuys, CAO
Get Well Hospital
Sam Dobbins, CAO
Beary Children’s Hosp.
Teresa Darnell, CAO
Wells Univ. Hospital
Dan Stanems, CMO
Get Well Hospital
Marina Samouilova, CMO
Beary Children’s Hosp.
M. Certain
Administrative Assistant
Dr. Maria Bresnahan
Chief of Cardiology
John Rinalli
Financial Analyst
Alice Chin
Accounting Manager
Tim Iris
IT Manager
Paul Cleary
Radiology Administrator
Lisa Hester
Manager, Clinical Eng.
Mike Olin, Ops. Manager
Get Well Hospital
Amir Sibboni
EVP & CAO
Redland
CEO
C Ondashi
EVP & CFO
Hospital Organization Chart

19. Who are the Value Owners and Buyers?

20. Getting to All of the Value Owners/Buyers
How can I reduce the very high rate
of turnover among my nursing staff?
What would be the impact on my
budget if I could cut it substantially?
Photo: Ed Lallo/Newsroom Ink

21. 4 Critical Factors
1. Understand and apply the dynamics between pricing and
profitability
2. Quantify and communicate the impact of the offer value to
justify a fair price
3. Create strong relationships with the specific buyers who
recognize the importance of a good value offering
4. Circumvent or engage price-only procurement buyers

22. "How can we get to the real Value Buyers and either involve
Procurement or go around them 'safely'?"
Recognizing Procurement's Drivers

23. Lowest price and
most extras
Price-only Buyers
Different Types of Buyers
Strong support and
a fair deal
Relationship Buyers
Most value at
Lowest price
Poker Players
Capture significant
value improvement
Value Buyers

24. Price-only Buyers
Price Only Buyers
Optimize value price by…
• Knowing market price
• Alternatives and Naked Pricing
• Bundling
Engage or Avoid Procurement by…
• Meeting requirements precisely – but not
more
• Focus on concessions
• Keeping score
• Regular interactions with Value Buyers
• Formulate and communicate value
propositions with all Value Buyers in advance

25. Value Buyers
Value Buyers
Optimize value price by…
• Sharing value created
• Base pricing on performance, results,
impact, etc.
Engage or Avoid Procurement by…
• 3-way relationships; You – Value Buyer -
Procurement
• Strong relationships with Value Buyers
• Provide Value Buyers with compelling
references & 1st-hand experiences

26. Relationship Buyers
Relationship Buyers Optimize value price by…
• Calculating value of free support
• Keeping prices in line with the market
Engage or Avoid Procurement by…
• Providing calculations to support value of
free support
• Providing market price benchmarks

27. How to Beat the Poker Player?
Rule
#1
Remember that Poker
Players are Value Buyers
Rule
#2
Make sure you have a
winning hand
Rule
#3
Be prepared to call their
bluff

28. Questions
1. Understand and apply the dynamics
between price discounts and profitability
2. Quantify and communicate the impact
of the offer value to justify a fair price
3. Create strong relationships with the
specific buyers who recognize the
importance a good value offering
4. Circumvent or engage price-only
procurement buyers
Which of the 4 Factors, or some other factor, prevents you from Optimizing your
Value Price?
How would you (are you) applying these Factors in your business?
What would be the impact on your business results if you applied these Factors
more effectively?

29. Selling and Negotiating an Optimal
Value Price Webinar
Selling and Negotiating an Optimal Value Price Webinar:
http://bit.ly/VRwebinar
In our experience, failure to
achieve value pricing is due to lack
of preparation, communication
capabilities and negotiation skills of
the sales people. In this webinar,
you will learn the best ways to
prepare sales people to achieve
optimal value pricing, and hear
actual case studies that offer
proven advice for communicating
and negotiating with customers.

30. Ph. 781-352-2460
info@globalpartnersinc.com
www.globalpartnersinc.com
Global Partners, Inc.
One Broadway
Cambridge, MA, 02142
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