The presentation provides an overview on pricing. What factors drive pricing, pricing structure, overview of pricing strategy, how to go about establishing competitive pricing for products and/or services for my business. The presentation will include walkthrough examples and conclude with some thoughts on pricing model. 

1. Fawzi Behmann,
President, TelNet Management
Fawzi.behmann@telnetmanagement.com
03-27-2010
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3. Pricing
What should I consider in establishing pricing for my business?
The presentation provides an overview on pricing. What factors
drive pricing, pricing structure, overview of pricing strategy,
how to go about establishing competitive pricing for products
and/or services for my business. The presentation will include
walkthrough examples and conclude with some thoughts on
pricing model.
Fawzi Behmann has over 20 years experience in product line
management for multiple product lines at different companies both
for equipment and semiconductor fields. Also, he was exposed to
pricing for applications and services. Fawzi Behmann holds BSC,
Master in Computer Science and MBA.
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4. Price is a key factor in buying decision products
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5. Factors Drive & Influence Price
» Market Segmentation
» What price would the market bear?
» Importance of features/benefits
» Competitive offering as a substitute
» Intensity of competition
» Others: e.g. product, services, support
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6. Product family XYZ – Unit Price/Cost/Margin
Model Price Cost Margin Price
Ultra $170 $105 62% Unit
Margin
Enhanced $145 $100 45%
Basic $100 $ 75 33%
Cost
Typical Strategy to drive price:
• Cost + markup
• Value based
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7. Pricing Strategy:
Product family XYZ – Unit Price & Price Breakdown
Functional Building Blocks and $ value Model Price
$40 $35 $30 $25 $20 $10 $10
F1 F2 F3 F4 F5 F6 F7 Ultra $170
$40 $35 $30 $20 $10 $5 $5
F1 F2 F3 F4 F5 F6 F7 Enhanced $145
$40 $30 $15 $10 $5
F1 F2 F3 F4 F5 Basic $100
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8. Example – Product Family XYZ Models and volume
based pricing (Price Matrix)
Ultra
Ultra 1
Enhanced
Enhanced 1
Basic
Basic 1
Basic 2
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9. Product family XYZ – Financials (Part of business case)
Pricing Trend
Assumption: Price erosion by 10% annually
Volume Forecast
Revenue Forecast
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10. Product family XYZ – Market Share (part of business case)
Market Size (SAM)
Product Volume Forecast
Product XYZ Market Share
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11. Product family XYZ – Competitive Differentiation
SWOT Analysis
• Strength
• Weakness
• Opportunity
• Threat
Feature & Price Competitive Analysis
Margin Analysis
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12. Summary
• It is important to clearly position your product into the right
market segment.
• Have a clear understanding of market size, players,
competitive offerings, pricing and value proposition
• Define your product price, cost, and margin
• Establish price matrix (discount by volume) and and use to
target the right customers to maximize design win
• Conduct SWOT analysis regarding your product and
understand competitive threats, opportunities, strengths and
weaknesses
• Watch competitive pressure selling at lowest price can easily
tempt you in lowering your price to win and your profit
• Develop clear value and differentiated proposition
• Develop Brand equity
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13. Look At The Total Picture
Price
Unit Minus
Margin
Cost
Net
Income Times
Return on Market
Investment Divided
Share
By
Unit
Times
Assets Volume
Managed Market
Size
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