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Pricing Maturity Report_HighTech industry

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The survey confirms what we have discovered first hand during the EPP HighTech Forum in 2013. Senior Management in European High-Tech companies are increasingly focused on further developing pricing and profit optimisation skills in their organisation. Read all the details here!

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Pricing Maturity Report_HighTech industry

  1. 1. European Pricing Maturity 2013 Results and key findings - HighTech Industry
  2. 2. Results and key findings - HighTech Industry HighTech industry – observations Highest pricing maturity in Europe HighTech respondents score significantly higher than any other industry on their pricing maturity. They come in ahead of all the rest at 2,62. When looking at the possible reasons, we discover that 86% have more than 15 people working exclusively on pricing globally, with the remaining 14% having between 8 and 15 people focussing on pricing. Significantly, approximately 71% of respondents have held their pricing function for more than 3 years. All respondents indicated that they are convinced that a price optimisation strategy is a “must have” business initiative which has to be worked on continually, and with support from the top. Big data analytics form a substantial part of the strategic arsenal with which every respondent in this sector handles their pricing and profit optimisation. Figure 1: Distribution of respondents within the HighTech industry Perception Reality Ambition 14,29% 28,57% 0% 28,57% 28,57% 28,75% 42,86% 42,86% 57,14% 14,29% 0% 14,29% Level 1: Price list maintenance Level 2: Transactional control Level 3: Full value capturing Level 4: Full profit optimisation Source : EPP European Pricing Maturity Study – 2013 Figure 2: Distribution of respondents within the HighTech industry perception reality ambition 57% Perceived pricing maturity 2,57 = LEVEL 2 43% 43% 14% 14% 0% Level 4: Profit Optimisation Actual pricing maturity 2,62 = LEVEL 2 Level 3: Full Value Capturing 29% 29% 29% Ambition within 12 months 3,36 = LEVEL 3 29% Level 2: Gain transactional control and optimize 14% 0% Level 1: Price List Maintenance You sell the right products to the right cutomers at the right prices C H A S M You develop end-user solutions with different revenue models You sell segmented solutions at value based prices You try to sell anything to anyone at all prices Source : EPP European Pricing Maturity Study – 2013 Page 2 of 4
  3. 3. Results and key findings - HighTech Industry HighTech industry – gap analysis The survey confirms what we have observed first hand during the EPP HighTech Forum in 2013. Senior management in European high-tech companies are increasingly focused on further developing pricing and profit optimisation skills in their organisations. They have indicated the topics on the right as key focus areas for the coming 12 months: Price policy & setting Monitoring Organisation & Governance The collective goal of the HighTech respondents is to understand the value attributes of their offering, as well as the value per attribute better, so that this can be used in value based pricing per segment. Another point for improvement is the use of price elasticity analysis in predicting and anticipating the outcome of pricing decisions. Periodic reporting and net prices per customer / segment / channel need to be available so that the sales force can perform what-if analysis to guide them in offerings. Cost price evolution needs to be readily available and immediately shared with relevant pricing decision makers, who should in turn receive a signal to check sales price of particular items which had an increase/decrease in cost price. Price promotions need to be systematically monitored and discussed with marketing/sales to come to better insights for next promotions. Figure 3: Gap analysis: HighTech industry Actual PMI score Gap with Ambition Tendering 0.33 Governance & Org. System & Tools 0.80 0.71 Monitoring Price Execution 0.82 0.76 Discount Strategy Price Policy Setting 0.57 0.83 Price Strategy 0.57 0.00 1.00 2.00 3.00 4.00 Source : EPP European Pricing Maturity Study – 2013 Figure 4: Distribution of maturity scores across components of the pricing framework Ambition Price Strategy 3,07 3,64 Price Policy & Setting 2,40 3,24 Discounting strategy Need to evolve to a stage where permission to overrule prices in the system is very limited, and controlled/monitored by price management team. Root causes of price overrides need to be investigated to decrease occurrence. Reality 2,71 3,29 Price Execution 2,52 3,29 Monitoring 2,29 3,11 System & Tools 2,64 3,36 Governance & Org. 2,63 3,43 Tendering 3,24 3,57 Source : EPP European Pricing Maturity Study – 2013 Page 3 of 4
  4. 4. Results and key findings - HighTech Industry HighTech industry – Tendering 43% of HighTech respondents make use of tendering. Satisfied with current performance Improve margin Improve pricing strategy Life time value calculation While about two thirds of the group indicate that they are satisfied with their current performance on tendering, the remaining third indicate that they still need to improve the following aspects during the coming 12 months: Install a margin improvement plan with specific margin targets and responsibility for reaching it before the tender is submitted. Apply an aggressive overall price strategy, taking into every item in the tender. Use a formal life time value calculation when evaluating your tenders, taking into account year-end rebates and bonuses of sales team. If you would like more information or to arrange an informal discussion on the issues raised in the EPP European Pricing Benchmark Study and how they affect your organisation, please contact: Project Manager: Nicolene Barnard Nicolene.Barnard@pricingplatform.eu President & Founder of EPP: Pol Vanaerde pva@pricingplatform.eu Page 4 of 4

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