Are You Pricing Like Dennis Denuto? My presentation to the Strata Community Australia National Convention, in Cairns, on Monday 2nd June 2014

1. Slide 1

2. Slide 2
Are You Pricing Like
Dennis Denuto?
Why Pricing Is Getting Scary?
Why Is Pricing So Important?
Are You pricing Like Dennis Denuto?
10 Ways To Improve your Pricing

3. Slide 3
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Why Pricing is
Getting Scary

4. Slide 4
Number 10
Power to the Customer
The Marketer The Customer
Customers know more about marketers,
than marketers know about customers

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Number 9
Comparisons are easy

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Number 8
Scan & Scram

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Number 7
Err at your peril

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Number 6
Automatic Refunds

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Number 5
Choices

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Number 4
Everyone’s going to know about this…

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Number 4
Even your Shareholders…

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Number 3
I’m not buying your time

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Number 2
Just give me your quote!

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Number 1
Beaten to a Pulp

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Warning:
Audience Participation Imminent
Why is Pricing
So Important?

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You offer a service with a 30% margin, and you are planning on reducing
prices by 5%. What sort of volume uplift is required
to
maintain
exis+ng
revenue?
You have a service with a 20% margin, and you are planning on increasing
prices by 8%. What sort of volume are you pu2ng
at
risk?
Ø 20% Volume UpliftØ 10% Volume UpliftØ 5% Volume Uplift
Ø 8.2% of volumes Ø 28.6% of volumes Ø 38.7% of volumes
Quiz Time
Decreasing & Increasing Prices

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

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

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

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

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

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Are You Pricing
Like Dennis
Denuto?

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Number 10
Leaving Pricing too late in the
Marketing Process

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

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Number 8
Using the Same Averages across all
Products & Services

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Number 7
Cost-Plus Pricing

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Number 6
Too Narrow a Competitive Perspective

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Number 5
To the General Level of the
Competition

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Number 4
Not Segmenting Customers

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Number 3
Mechanical

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Number 2
Not Challenging Competitors or the
Industry

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Number 1
Not Changing Your Pricing Model

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Number 1
Someone Who Did Change her
Pricing Model…

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10 Ways Your
Can Improve
Your Pricing

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Number 10
Develop a Pricing Strategy…

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Number 10
...that Includes a Discounting Policy

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Number 9
Don’t Condition the Market

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Number 8
Form a Pricing Committee

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Number 7
Don’t Talk About Costs…
…and remove invoice shock

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Number 6
Its Not About You

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Number 5
All Value Is Subjective

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Number 4
All Value Is Contextual

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Number 4
All Value Is Contextual

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Number 3
Segment the Market

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Price
Buyers
Rela8on-­‐
ship
Buyers
Value
Buyers
Poker
Players
Number 2
Understand Your Buyer

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Number 1
Remember Goldilocks…?

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Any
Questions?

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Jon Manning
Founder & Director, Sans-Prix.com
Founder & Managing Director, PricingProphets.com
PO Box 533, Ascot Vale, Vic 3032 Australia
youtube.com/user/PricingProphets
linkedin.com/company/Pricing-Prophets
jon@sans-prix.com
+61 (0) 405 629-141
@SansPrix | @PricingProphets facebook.com/PricingProphets
http://www.SansPrix.BlogSpot.com
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