2. What is the Right Price?
• Too High
– Make Margin, Lose Volume = Not Optimum
• Too Low
– Lose Margin, Excess Volume = Not Optimum
• Just Right
– Solid Margin, Solid Volume = Optimum
(Optimum is Profit and Market Share Gain Balance)
5. Pricing Model
(A Simple Framework)
Historical Time Series Analysis
• Seasonal Supply/Demand Trends
• Actual v. Projected Results
• Statistical Pricing Analysis
Advance Orders Analysis
Economic Analysis
• Actual Advance Orders
• Macroeconomic
• Forecasted Orders
• Microeconomic
• Odd Event (Internal/External)
• Industry Trends
Cost/Expense & B-E Analysis
• Fixed Costs
Other Variables
Pricing Strategy
• Variable Costs
• Known
• Ad Hoc
• Break-Even Point
Management Estimates
Competitive Analysis
Customer Analysis/ Ranking
• Senior Management
• Capacity (Current and Planned)
• Segment A
• Operating Managers
• Pricing
• Segment B
• Dept. Managers
• Substitutes
• Other Segment
6. How to Do It?
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Identify the Team
Gather Information
Organize Information
Perform Analysis
Make a Decision
Test and Adjust
Repeat Process