This document discusses target pricing and how establishing appropriate target prices can help businesses manage revenue and margins. It explains that target prices serve as anchors in human decision making due to the psychological trait of anchoring. Target prices provide salespeople with pricing goals or benchmarks to aim for in negotiations with customers. The document then discusses how businesses can establish price guidance, including target prices, based on factors like historical price averages, percentile analysis of past deals, and segmentation of customers. It emphasizes setting realistic and data-driven guidelines to improve pricing performance and reduce need for manual price approvals.
Survey conducted with 48 mid-sized business-to-business companies to validate changing landscape of B2B selling. Questions covered topics related to sales compensation, pricing, quoting and profitability.
Survey conducted with 48 mid-sized business-to-business companies to validate changing landscape of B2B selling. Questions covered topics related to sales compensation, pricing, quoting and profitability.
In this presentation Fusebill CEO Steve Adams discusses how to evaluate price models as opposed to price points, review churn and its impacts, what to consider when selecting a price strategy and review some of the most popular strategies for subscription based businesses .
25 Pricing Strategies for Subscription and Online CommerceOneBill
25 innovative pricing strategies for a subscription business.
As more and more companies transform their business to a subscription model, there is one important strategic element that is largely overlooked: PRICING STRATEGY.
This 25-page e-book offers:
* Creative ways of offering pricing models with examples
* Inspire you to try one or more or combination of many to suit your business
* Learn the importance of pricing strategy to increase customer base and revenue
* Adopt a subscription platform approach for running your subscription billing automation than just sending recurring invoices to your customers.
Profitable Customer Acquisition for Banks and Credit Unions. Traditional marketing strategies are ineffective and inefficient resulting in significant missed opportunities for Community Banks and Credit Unions. OptiRate offers a unique approach that enables Banks & Credit Unions to attract profitable customers at a fraction of their current customer acquisition costs.
This event will provide Senior Managers, Entrepreneurs, Sales Managers, Human Resources Managers and Recruiters with the knowledge, insights, tools and techniques required to consistently recruit effective salespeople.
This will typically provide greater than 90% hiring accuracy, reduce staff churn by at least 30% and increase average annual sales per salesperson by 20-40%.
The Strategy accelerator - Business models with sustainable competitive advan...Alfred Griffioen
Innovate your business model to gain higher ROI. Determine your sustainable competitive advantage (market relevancy or a unique product) and choose your strategy: ally, combine, excel or consolidate. This presentation in English is based on the Dutch book 'De strategieversnelling'. See www.strategy-accelerator.com
LeveragePoint discusses the downsides of relying too heavily on a cost/price control approach. We'll show a recent case example of a company facing the dilemma of stagnant growth - and how a value-based marketing and sales approach will save it.
Aquent/AMA Webcast: Priming the Pump: Driving Loyalty with Targeting and Posi...Aquent
It’s no secret that in many categories brand loyalty is declining faster than the price of Facebook’s stock. Kevin Clancy believes poor targeting and a lack of consistent, compelling positioning are major reasons so many companies struggle with connecting customers to their brand.
In this webcast, Kevin will outline a process that considers profit-related criteria such as retention potential, level of satisfaction with current brand, likelihood to try or usage of a competitor’s brand, and problem potential when assessing the value of current and prospective customers. He will also explain the relationship between the magnitude of the problem a brand solves for a customer and market response in the form of sales and advocacy.
Alexander Group 2012 SaaS Benchmarking Study SaaS sales leaders looking for actionable insights to inform their 2012 strategy will receive a comprehensive set of metrics, including information on sales coverage, job roles, sales productivity, customer acquisition and retention, and sales compensation.
You are viewing presentations from conferences that I have attended. Please enjoy & if we can help you with any logistics projects in the Americas please contact me at 678.364.3475
Bill was also on the Board of Directors for the St.Vincent DePaul Foodbank in Roseville California helping with the fund raising and meals to the poor program. While based in Northern California he was successful in fund raising programs for the Crusade of Mercy and helped Father Dan Madigan at the Sacramento Food Bank also. For 2008, Bill is a member of the Board for WORKTEC on also an Advisory Board Member for Boys and Girls Club for Metro Atlanta-Clayton County Chapter. See www.worktec.biz or www.bgcma.org . Bill is also on the Board of Directors for the Southeastern Warehouse Association & represents Georgia for 2010-2012.
Regards,
Bill Stankiewicz
Vice President and General Manager
Shippers Warehouse
Email: williams@shipperswarehouse.com
www.shipperswarehousega.com
http://www.linkedin.com/in/billstankiewicz2006
http://twitter.com/BillStankiewicz
http://www.topexecutivesnet.com/index.aspx
In this presentation Fusebill CEO Steve Adams discusses how to evaluate price models as opposed to price points, review churn and its impacts, what to consider when selecting a price strategy and review some of the most popular strategies for subscription based businesses .
25 Pricing Strategies for Subscription and Online CommerceOneBill
25 innovative pricing strategies for a subscription business.
As more and more companies transform their business to a subscription model, there is one important strategic element that is largely overlooked: PRICING STRATEGY.
This 25-page e-book offers:
* Creative ways of offering pricing models with examples
* Inspire you to try one or more or combination of many to suit your business
* Learn the importance of pricing strategy to increase customer base and revenue
* Adopt a subscription platform approach for running your subscription billing automation than just sending recurring invoices to your customers.
Profitable Customer Acquisition for Banks and Credit Unions. Traditional marketing strategies are ineffective and inefficient resulting in significant missed opportunities for Community Banks and Credit Unions. OptiRate offers a unique approach that enables Banks & Credit Unions to attract profitable customers at a fraction of their current customer acquisition costs.
This event will provide Senior Managers, Entrepreneurs, Sales Managers, Human Resources Managers and Recruiters with the knowledge, insights, tools and techniques required to consistently recruit effective salespeople.
This will typically provide greater than 90% hiring accuracy, reduce staff churn by at least 30% and increase average annual sales per salesperson by 20-40%.
The Strategy accelerator - Business models with sustainable competitive advan...Alfred Griffioen
Innovate your business model to gain higher ROI. Determine your sustainable competitive advantage (market relevancy or a unique product) and choose your strategy: ally, combine, excel or consolidate. This presentation in English is based on the Dutch book 'De strategieversnelling'. See www.strategy-accelerator.com
LeveragePoint discusses the downsides of relying too heavily on a cost/price control approach. We'll show a recent case example of a company facing the dilemma of stagnant growth - and how a value-based marketing and sales approach will save it.
Aquent/AMA Webcast: Priming the Pump: Driving Loyalty with Targeting and Posi...Aquent
It’s no secret that in many categories brand loyalty is declining faster than the price of Facebook’s stock. Kevin Clancy believes poor targeting and a lack of consistent, compelling positioning are major reasons so many companies struggle with connecting customers to their brand.
In this webcast, Kevin will outline a process that considers profit-related criteria such as retention potential, level of satisfaction with current brand, likelihood to try or usage of a competitor’s brand, and problem potential when assessing the value of current and prospective customers. He will also explain the relationship between the magnitude of the problem a brand solves for a customer and market response in the form of sales and advocacy.
Alexander Group 2012 SaaS Benchmarking Study SaaS sales leaders looking for actionable insights to inform their 2012 strategy will receive a comprehensive set of metrics, including information on sales coverage, job roles, sales productivity, customer acquisition and retention, and sales compensation.
You are viewing presentations from conferences that I have attended. Please enjoy & if we can help you with any logistics projects in the Americas please contact me at 678.364.3475
Bill was also on the Board of Directors for the St.Vincent DePaul Foodbank in Roseville California helping with the fund raising and meals to the poor program. While based in Northern California he was successful in fund raising programs for the Crusade of Mercy and helped Father Dan Madigan at the Sacramento Food Bank also. For 2008, Bill is a member of the Board for WORKTEC on also an Advisory Board Member for Boys and Girls Club for Metro Atlanta-Clayton County Chapter. See www.worktec.biz or www.bgcma.org . Bill is also on the Board of Directors for the Southeastern Warehouse Association & represents Georgia for 2010-2012.
Regards,
Bill Stankiewicz
Vice President and General Manager
Shippers Warehouse
Email: williams@shipperswarehouse.com
www.shipperswarehousega.com
http://www.linkedin.com/in/billstankiewicz2006
http://twitter.com/BillStankiewicz
http://www.topexecutivesnet.com/index.aspx
Path To Revolutionary Merchandising And Marketing DecisionsG3 Communications
Retailers are under pressure from all sides today, from the empowered consumer to increased competition. Leading retailers have joined the revolution to harness the power of their data assets to improve their merchandising and marketing actions that drive real business value.
Hear DemandTec, an IBM Company and a recognized Retailer discuss the revolution that is driving superior decisions across price, promotion, and assortment by introducing science to put the shopper at the center of each decision.
In this webinar you will learn the value of integrating your merchandising and marketing decisions, and effectively collaborating within your organization and with your manufacturer trading partners. We will discuss how to
Use shopper insights to make better merchandising decisions
Localize your assortment through optimization and collaboration
Deliver relevant, targeted promotions
Make pricing decisions that drive category and customer goals
Partner with your manufacturing partners across all your activities
A Simple Tutorial on Conjoint and Cluster AnalysisIterative Path
A simple tutorial to show conjoint analysis and cluster analysis. please send your feedback, this version is still rough and I would like to iteratively improve it so it is useful for most.
Adaptive Marketing - Monetization and Pricing Models for the New worldPinkesh Shah
Head of Product Management, InMobi speaks at Product Professionals Event Hosted by Adaptive Marketing in Bangalore, India. Product Management and how to monetize and price?
Find our how to make your advertising accountable. David Beaton, Senior Partner & CEO of Custometrics leads this instructive session that addresses what measurement sources are available to advertisers in the digital space. Share an analysts’ perspective on the future of measurement and revenues from TV advertising? How can ad networks e-mail engines and campaign management systems connect? Can data be used to drive a dynamic participatory storytelling process!
Deloitte vendavo sept 2010 - outcome based approachTheo Slaats
Vendavo Pricing Seminar Düsseldorf september 2010
Presentation by Theo Slaats, co-leader Deloitte EMEA Pricing and Profitability Management Center of Excellence
8. Source
Products 00-19 20-39 40-59 60-79 80-99 Correlations
Cordless trackball $8.64 $11.82 $13.45 $21.18 $26.18 0.42
Cordless keyboard $16.09 $26.82 $29.27 $34.55 $55.64 0.52
Design book $12.82 $16.18 $15.82 $19.27 $30.00 0.32
Neuhaus $9.55 $10.64 $12.45 $13.27 $20.64 0.42
Chocolate
1998 Cotes du $8.64 $14.45 $12.55 $15.45 $27.91 0.33
Rhone
1996 Hermitage $11.73 $22.45 $18.09 $24.55 $37.55 0.33
Correlation is a statistical measure of how much the movement of two variables is related. A correlation of 0 indicates that the change in
value of one variable has no bearing on the change in value of the other variable.
Source: Dan Ariely, Harper, 2010
9. The Point
The exercise brings to light a concept the author calls
“arbitrary coherence” which while insignificant in itself
illustrates how we, as humans, form or accept
“anchors” in our decision-making.
For our purposes, as pricers, initial prices serve as
anchors.
Getting the right price to the sales rep in the field is an
important first step in managing the revenue and
margin outcomes for your business.
Gartner - “Innovation Insight: Price Optimization Leverages CRM, Big Data and In-Memory Computing to Increase Profits and
Innovation in the Customer Experience” – 26 April 2012
10. What is a target price?
Price administrators use the concept of a
target price to provide a goal or benchmark
for sellers to achieve on sales.
11. Why is target pricing
effective?
Target prices are often effective
because of a human trait called
‘anchoring.’
19. Where do Target Prices
come from?
Target Prices are one
form of
Price Guidance
20. What is Price Guidance?
Price guidance are the guidelines that
provide direction to sales people and to
price approvers.
Discounting
Margin floors
Payment terms
Freight and Packaging
21. How do I establish guide
lines?
Guidance can be calculated
based on:
Historic price average
Price band percentile
Regression analysis
22. Matrix-Based Guidelines Motors Pumps Castings Belts
Judgment
Consistent with most organizations’ current approval Sales Mgr 22% 27% 30% 15%
processes
VP Sales 20% 22% 28% 12%
Improve performance with additional granularity
Automation of guidelines drives compliance EVP Ops 15% 20% 26% 10%
Percentile-Based Guidelines
Define price and approvals at the same percentile
across segments Northeast
# of Transactions
Centrifugal Pumps
>$10K
Intelligent Guidelines
Increase value capture via precise segmentation and 95th
analysis of historical business patterns in each percentile
segment
Use data and analytic algorithms guideline levels
Margin %
Science
Floor Approval Optimal
Update dynamically to reflect market conditions
Power & Risk TM Guidelines
Power & Risk combines analysis of historic sales and
# of Transactions
managerial judgment
Risk Power
adjustment adjustment
Optimal price percentile varies by segment to capture
additional opportunities via Power & Risk scores
Approval levels are optimally allocated to avoid losing
important sales opportunities
Margin %
Floor Approval Optimal
23. Best Practices in Establishing Guidelines
Best Practice Tracking
Set guidelines that improve price and Track value of approval chain using
margin performance Price In/Price Out
Set realistic guidelines Use Target Price Yield to monitor guideline
effectiveness
Reduce manual reviews by establishing Track use of Negotiated Discount by Sales
‘intelligent’ guidelines
Display adherence to guidelines in simple Deal Score provides guidance without
fashion at time of Negotiation disclosing underlying data
What is a target price?Price administrators use the concept of a target price to provide a goal or benchmark for sellers to achieve on salesIn this way, the price target acts a positive influence, much like a magnet, on the price of each deal. This positive influence provides guidance to sales managers which can drive consistency with the pricing strategy.
Anchoring, as studies by notable psychologists Daniel Kahneman and Amos Tversky have shown, is tendency to bias decision making based on information obtained first early in the process. That is to say, the information I learn first has greater weight in my reasoning than information gained later. And, the decisions I make will be shaded by that information. That early information acts like an anchor to effect the choice I make. Providing an analytically informed Target Price as an anchor is supportive of maximizing the opportunity of each deal.
A simple example of price anchoring we might encounter on an ‘everyday’ basis is a price tag at a department store which shows a comparison price, in this example Compare at $700, and an actual price, your price, which is lower. In this example an amazing $279.99. The reference price of $700 serves provides an anchor for decision-making. A logical conclusion is that $279.00 is an excellent bargain on a designer label piece of woman’s wear. At a 58% discount it practically screams “buy me.”
In a business to business setting, an example of effective anchoring is - a sale rep requesting pricing for a customer is provided a Target Price.Here the Target Price provides an benchmark for the seller and acts to influence their decision-making.There are a number of ways that Target Prices are derived. Examples span from those simply derived to others based on sophisticated modeling. A short list includes target prices based on discounts from a list price, a percentile based on historical price points, average selling price, or the outputs of price optimization engines. Regardless of how the target price is derived the intent is the same – provide a benchmark price as an anchor. Lets look at an example for a B2B company. Our chart depicts sales volume (depicted on the vertical axis as Quantity in units by the height of each bar) and the price per unit (depicted by moving left to right on the horizontal axis as prices ranging from low to high). In the chart we see prices ranging from $6.00 to $13.50. A target price provided to Sales of $10.50 creates a benchmark to influence higher prices. Is a target price 100% effective? Not in and of itself. The rationale for the target price is an important factor. In this example nearly 22% of sales volume is priced at or above the $10.50 target. And, greater than 44% of sales volume is within +/-$1 or 10% of the target. The message in the data is $10.50 is a very achievable price.
Another important concept for the price administrators is the Price Floor. When used in conjunction with Target Prices the Price Floor establishes a corridor of appropriate pricing in which, as the name implies, the Price Floor establishes the lowest acceptable price. In the example on the screen the Price Floor is $7.50. Sales below the Price Floor are not accepted. In many cases, these sales produce un-acceptable Pocket Margins, are often unwarranted, and should not be approved”Often, a portion of this sales volume will migrate to higher prices. And, for the volume that does not, it will be passed over by the supplier in favor of sales that deliver acceptable returns.
Using the Vendavo Price Manager solution - Targets and Floors can be set at different levels for different products, customer types, regions, channels, or any other business dimension. In the example on screen, our initial corridor has a Target Price of $10.50 and a Floor of $7.50. Which we’ll now call segment A. We will introduce a second Segment, called B, with a Target Price of $36 and a Floor of $32. The notion of establishing differentiated corridors is the essence of a differentiated pricing strategy, which is sometimes called “value pricing strategy.” Implementing Value Based Pricing with segment specific anchors in the form of target prices and floors can be highly beneficial in maximizing sales.”
Another important concept for the price administrators is the Price Floor. When used in conjunction with Target Prices the Price Floor establishes a corridor of appropriate pricing in which, as the name implies, the Price Floor establishes the lowest acceptable price. In the example on the screen the Price Floor is $7.50. Sales below the Price Floor are not accepted. In many cases, these sales produce un-acceptable Pocket Margins, are often unwarranted, and should not be approved”Often, a portion of this sales volume will migrate to higher prices. And, for the volume that does not, it will be passed over by the supplier in favor of sales that deliver acceptable returns.
What is price guidance?Price guidance are the guidelines that provide direction to sales people and to price approvers In a previous Pricing Minute we covered Target Pricing. Target pricing is a form of price guidance. It sets a benchmark for a seller, and a deal approver. It provides a positive influence on decision making and drives consistency with the pricing strategy.
Guidelines for target price, approval levels, and floors can be calculated a number of ways. Effective methods can be based on historical price average, price band percentiles, or deviation from a regression line. Any of these methods is viable. More advanced methods leveraging pricing science are available. These methods produce higher levels of optimization in guidance using sophisticated algorithms. Regardless of the method employed, a key is to conduct the analysis for each peer group.