Are you pricing like Dennis Denuto?

1. pricing
are you
like Dennis Denuto?

2. Today’s Talk…
► Why pricing is getting really scary?
► How to recognise when you’re pricing like…
► Why pricing is so important
► Ten ways to better frame your pricing

3. Number 10
I’m not buying your time

4. Number 9
Just give me your quote!

5. Number 8
Beaten to a Pulp

6. Number 7
Comparisons are easy

7. Number 6
Scan & Scram

8. Number 5
Everyone’s going to know about this…

9. Number 5
Even your Shareholders…

10. Number 5
Premium Pricing…

11. Number 5
…or Commodity Pricing?

12. Number 4
Automatic Refunds

13. Number 3
Err at your peril

14. Number 2
Outsourced Pricing

15. Number 1
Power to the Customer
The Marketer
The Customer
Customers know more about marketers,
than marketers know about customers

16. pricing
ten common traps

17. Number 10
Leaving Pricing too late in the
Marketing Process

18. Number 9
Top-down Pricing to fix the P&L

19. Number 8
Using the Same Averages across all
Products

20. Number 7
Cost-Plus Pricing

21. Number 6
Too Narrow a Competitive Perspective

22. Number 5
To the General Level of the
Competition

23. Number 4
Not Segmenting Customers

24. Number 3
Mechanical

25. Number 2
Not Challenging Competitors or the
Industry

26. Number 1
Not Changing Your Pricing Model

27. Number 1
Someone Who Did Change her
Pricing Model…

28. pricing
why is it important?

29. Quiz Time
Decreasing & Increasing Prices
You have a product with a 30% margin, and you are planning on reducing
prices by 5%. What sort of volume uplift is required to maintain existing
revenue?
 5% Volume Uplift
 10% Volume Uplift
 20% Volume Uplift
You have a product with a 20% margin, and you are planning on increasing
prices by 8%. What sort of volume are you putting at risk?
 8.2% of volumes
 28.6% of volumes
 38.7% of volumes

30. Why is Pricing so Important?
Impact on Operating Profit of a 1% improvement in…
12.3%
11.1%
8.7%
7.8%
3.6%
3.3%
2.6%
2.3%
Fixed Costs
Volume
Variable
Costs
Price
Fixed Costs
Volume
Variable
Costs
Price

31. …Regardless of the Industry
Impact on Operating Profit of a 1% improvement in Price
Impact of a 1% Price Improvement on Operating Profit
Automotive
22.0%
Transportation
13.5%
Metals & Mining
12.7%
Chemicals
12.3%
High Tech &
Electronics
► If prices were increased 1%...?
11.4%
Aurospace & Defense
For The Kroger Retail Food
Chain…
11.1%
Paper
10.4%
For Coca Cola…
Insurance
10.1%
► If prices were reduced 1%...?
Healthcare
9.8%
Oil & Gas
9.3%
Communications
8.6%
Consumer Products
6.8%
Pharmaceuticals
Banking
Investment
6.1%
3.0%
1.8%
For Continental Airlines
► 44mill passengers x Average fare
of $193 = Loss

32. Who’s a Fan…
Of this Brand?
The Importance of Price
As the Primary Selection Criteria, by brand – PC Industry
50.0%
40.0%
32.0%
28.0%
26.0%
18.0%
8.0%
2.0%
Packard
Other
Compaq
HP
IBM
Gateway
Dell
Source: Docters, R et al (2004) Winning the Profit Game: Smarter Branding, Smarter Pricing, McGraw-Hill, p40
Apple

33. The Wheel of Fortune
A Catalogue of Pricing Models, Strategies & Tactics









English
Dutch
Yankee
Vickery
Reverse
Traditional
Pricing
Models
Auctions
 Gimmicks
 Choices
 Price Experiments
Cost-Plus Pricing
Market / Competition Pricing
Non-Linear / Two-Part Pricing
Dynamic Pricing / Revenue or Yield Management
Value-based
Models
Misc Pricing
Models II




Paired Products
Second-hand Products
Unbundling
Pay-As-You-Go




Misc Pricing
Models I
Freemium
Pay-What-You-Want
Direct Cross Subsidy
Indirect Cross Subsidy




1G: Sponsorship
2G: Cost-per-Thousand
3G; Cost-per-Click
4G: Cost-per-Action
Pricing
Models,
Strategies &
Tactics
Digital
Pricing
Models
Time-based
Pricing
Software
Pricing
Models
Digital
Advertising
Models
Legal &
Professional
Service
 Customer Value Analysis
 Economic Value Analysis

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


Buy Now / Upsell Later
Buy Now / Compliment Now
A Product is for Life…
Free Today, not Tomorrow
Start the Clock




 Input -related
 Hybrids (Input / Output –related)
 Output -related
User-based
Usage-based
Time-based
Location-based

34. Words of Pricing Wisdom
“Price is what you
pay…value is what you get”
“…if you have to have a
prayer session before
raising…prices…then
you’ve got a terrible
business”
“The single most important
decision in evaluating a
business is pricing power”

35. But What is “Pricing Power”?
“The ability of
you to get the
price you
deserve for
the value you
provide”

36. pricing
10 ways to better frame your

37. Number 10
Don’t over-complicate your Pricing

38. Number 9
Don’t Talk About Costs…
Slide 38

39. Number 8
…talk About Value Instead!
The Hallmarks of a good Value Proposition:
► What value does your product or service provide to
customers
► Quantify the Magnitude of the Value provided
► Illustrate that value is superior to the competition

40. Number 7
Know Your Competition & Customer
 Understand the
Customer
Adhesion
10
8
Low Odour
Appearance
6
4
 How important are
these value attributes
to them?
2
Environmentally
Friendly
Strength
0
Resistance
Rheology
Durability
Us
The Competition
 Understand the
Competition
 Points of parity, points
of difference, points of
contention

41. Number 6
Link Prices to a Customer Value Metric

42. Number 5
Do you really want half price?

43. Number 4
What happened to Boxing Day?

44. Number 3
Sell Goods As Services

45. Number 2
Understand Behavioural Economics

46. Number 1
If You’re Negotiating with a Pitbull…

47. Any
Questions?

48. Contact Information
Jon Manning
Founder & Director, Sans-Prix.com
Founder & Managing Director, PricingProphets.com
PO Box 533, Ascot Vale, Vic 3032 Australia
+61 (0) 405 629-141
jon@sans-prix.com
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