The European Pricing Blog

Are you being creative in improving your profits?

2012-02-15T06:33:00-08:00

The Practical Power of Pricing in Promoting Profit

Personal and concrete reflections by ANDERS REHNBERG

February 15, 2012

The State of Creativity

“A one per cent Price increase means a 12% Profit improvement”

Price as a lever for increased profits has been well understood by many top-level executives in the industry for a long time but it still amazes me how often I can surprise senior managers by showing scenarios in spread sheets that outline the impact of even modest price movements on their company’s profits.

There is a wide-spread lack of activity and creativity in the area of Price in most companies, even though this is an area where they could ‘carve gold with a small knife’ as we say in my native Sweden.

I have been preaching ‘creative pricing’ (not a relative of ‘creative bookkeeping’) for over 20 years and I cannot really say that the overall understanding of Price in the industry has improved much at operative levels, except in companies I have worked with naturally.

The same company executives who would never turn down a technical challenge to improve their Network Equipment or stream-line their Preventive Maintenance Service will say it is impossible when asked to find a way to increase prices in the Market.

The creativity goes out the window when confronted with Price.

Real life Story: 15% Price Increase of a Commodity without Volume Loss

When I took over a small (60 people) UK manufacturing operation many years ago, trading in window blinds, I was faced with the immediate problem of depressed pricing. I needed to quickly find a way to improve overall price levels, but with a fairly standard product and 1055 competitors (according to listings in Yellow Pages) it seemed difficult – unless you knew how to apply commercial creativity!

I correctly estimated that my customers (blind shops in the London area in the early 90´s) were less used to metric measurements, seeing that all the price lists and documentation in this industry was done in imperial measurements by tradition , furthermore I specifically noted that the "centimeter" was the least known metric measurement. Therefore I updated all the companies´ pricelists, showing ‘width’, ‘drop’ and ‘price’, in a nice new glossy format; showing all the measurements in centimeters AND increasing prices by 15%!

The change in usage of measurements lead to several complaints from blind shops, no complaints were heard about the increased prices. The public, who was being recommended the blinds by the blind shops were not price-sensitive, therefore the company did not lose any sales due to my price move. Needless to say it did wonders for my profits.

Fear of Failing

As an Applied Physicist by training I was used to being scientifically creative, over the years I have found that this skill can be applied equally well to commercial problems – the same brain cells are being used.

Another aspect of Pricing is the fear of losing volume, “but if we increase our prices then customers will go elsewhere” is a common heard worry. This is notwithstanding the proof that I am able to show, that in most cases the volume loss they would have to suffer would have to be enormous to reduce profits ("you can lose up to 1/3 of your volume when you increase prices by 10%").

On the brink of bankruptcy this this fear can be overcome.

Curious how creativity works in practice: read the case study from this Expert White Paper
Link under Price Management.

10 Historical Pricing Milestones

2012-02-02T04:51:00-08:00

2nd Annual Pricing & Profit Optimization Forum on Life Sciences: Save the date!

2012-02-01T07:48:00-08:00

Click here for more information

Why is Pricing Strategy the Sales Training Gap that Leaders Ignore?

2012-01-23T01:49:00-08:00

In 2011, we surveyed and interviewed over 12,000 sales people about sales training. When we asked what area of the sales process reps wanted help with, 4 out of 5 answered “Pricing/Justifying Costs/ROI for our product/service”. Sales people are uncomfortable having the pricing discussion. And leadership is letting them down by not developing their skills.

The impact on the sales force is stalled deals. Sales cycles get extended. Reps pester customers. Managers pester reps. VPs of Sales pester Managers. Everybody is staring at the forecast keeping score. The best sales leaders have changed the game with pricing by involving the key stakeholders (internal and external) early in the sales process. The best leaders use the following 3 steps to solve the Sales Training Gap in Pricing.

#1 - Exit Criteria—does your sales process have exit criteria? Exit Criteria is observable customer behavior that signals the buyer has progressed to the next stage..

Why does this matter—Sales people throw price out too early. Most times customers ask for a number because they have been conditioned to do so by other bad sales people. Unless a customer has clearly articulated all of their problem solving options and ranked them, you cannot discuss price. Why? Because you will have no ability to put a thoughtful proposal together that is focused on what matters to The Customer.

#2 - Collaboration—does your sales process have a step for collaboration with the customer on pricing?

Why does this matter—Budget—is this a replacement spend or new spend? If new, where will the money come from? They will have to create budget and it is your job to show them a believable revenue lift (longer term) or a tangible cost savings (short term). If your solution does not grow revenue or reduce cost In the Eyes of the Customer, you are done. If they don’t have some overwhelming compelling event that is creating urgency for you, the lack of value is the reason for the stall. That is a fact.

#3 - Internal Approvals—does your sales process have a fluid, easy process to get pricing for a customer?

Why does this matter—We see too many companies where non customer facing stakeholders (finance, procurement, legal) are making customer facing decisions without any customer facing knowledge. If this is happening don’t blame them. Blame sales leadership. It is the job of the sales leaders to ensure back office process is smooth and there is trust. Take these people out on some sales calls. Expose them to what it means to get a customer. Show them your customer acquisition cost.

Call To Action -

Make the investment in the 3 stakeholders. Your ability to help your reps, your customers and your company understand pricing is a valuable exercise. The talent management activities above can generate a nice Q1 ROI in a short period of time. If you are looking for ways to execute this flawlessly call my friend John Deris SVP of National Accounts at Ryder or my friend Rick Cibos, Group Director of National Accounts at Ryder. These guys are two of the best.

What tactics have you deployed to manage the pricing discussion internally and externally?

Source: Sales Force Effectiveness Blog on Linkedin (Posted by Matt Sharrers on Fri, Jan 20, 2012)

EPP is pleased to announce a new partnership with Simon-Kucher & Partners

2012-01-17T04:34:00-08:00

The European Pricing Platform (EPP) is proud to announce that they have added Simon-Kucher & Partners, a global consulting firm specializing in pricing and marketing strategy, to their partners. Simon-Kucher & Partners’ experience builds on over 2000 projects conducted by their pricing experts in the last three years alone. Simon-Kucher will become a new Pricing Expert Partner, exhibitor, and sponsor of upcoming EPP events throughout Europe. Simon-Kucher will offer EPP participants insights, benchmarks, proven tools and methodologies to illustrate how to maximize profitability through cutting-edge marketing and pricing strategies.

“The Global Pricing Study that surveyed more than 3,900 high-level decision makers from all major service and manufacturing industries about their profit culture indicated that 65 percent of companies are not able to charge the prices they deserve for the value their products and services deliver. As a result, they lose 25 percent of profits. Rather than focusing on profit, 46 percent of the companies fight price wars to gain volume and market share. And when companies finally bring themselves to raise prices, they only get half of what they planned,” explains Danilo Zatta, Partner at Simon-Kucher & Partner. “Partnering with EPP puts us in a position to address existing pricing practices even better and to show how the challenges identified in the Global Pricing Study 2011 can be solved.”

Simon-Kucher & Partners supports and partners with clients in the elusive and yet attainable hunt for sustainable business growth through profit margin improvement. A comprehensive and well-executed marketing and pricing strategy can result in critical profit gains and, ultimately, business survival during difficult times. With 23 offices in 17 countries and over 570 professionals, the company has been defined as the world’s leading pricing consultancy by both BusinessWeek and The Economist. Simon-Kucher & Partners has served more than 100 of the Global Fortune 500 companies. Clients come from all major industries and are often leaders in their markets.

“Simon-Kucher has been carefully selected to join our group of pricing experts worldwide because of their proven track record, experience, and pricing science methodologies,” says Pol Vanaerde, EPP president. “We are pleased to have Simon-Kucher & Partners included on our expert list and look forward to working closely with them to better serve our participants.”

EPP serves as the first ‘not-for-profit’ network for cross-industrial pricing and profit optimization decision makers in Europe. Through various on and offline media, EPP is dedicated to developing and sharing pricing best practices, effective tools, methodologies and technological solutions that help to successfully define and implement strategic pricing. Through various on- and offline media, EPP is dedicated to develop and share pricing best practices, effective tools, methodologies and populate technological solutions assisting in successful definition and implementation of Strategic Pricing.

About Simon-Kucher & Partners Strategy & Marketing Consultants

Simon-Kucher & Partners is a global consulting firm specializing in strategy, marketing, pricing and sales. Founded in 1985, the company focuses on Smart Profit Growth^SM by helping clients to boost their top line instead of cutting costs. With over 570 professionals in 23 offices worldwide, the practice is built on evidence-based, practical strategies for profit improvement. Simon-Kucher & Partners is regarded as the world's leading pricing advisor and thought leader.

About European Pricing Platform

The EPP offers your company to have the right pricing tactics in place to guarantee customer loyalty and deliver sustained margin growth to your business. Enhance your pricing know-how and be successful in it by joining this dynamic and yet resourceful pricing platform.The EPP helps your company find the right pricing tactics to guarantee customer loyalty and generate sustainable margin growth for your business. Enhance your pricing know-how and be successful in it by joining this dynamic and resourceful pricing platform.

EPP is proud to announce The Pricing Thesis Award 2011 - 2012

2011-11-25T06:14:00-08:00

European Best Pricing Master Thesis Award

- Weak pricing cuts profits by 25 percent, global study reveals that not everyone gets what they deserve -

November 2011

The European Pricing Platform (EPP) reaches in the academic year 2011-2012 a new ‘European Best Pricing Master Thesis Award’ out to the writer of the best thesis that addresses pricing as the main theme. An experienced jury of pricing experts decides eventually who the winner will be and shall be announced on an ePP event in Autumn 2012.

In Europe experienced pricing professionals are still scarce. Only few organisations have pricing managers today. A global pricing survey with more than 3.900 respondents by global strategy and marketing consultancy Simon-Kucher & Partners reveals that 65 percent of companies are not able to charge the prices they deserve for the value their products and services deliver. Rather than focusing on profit, 46 percent of the companies fight price wars to gain volume and market share. And when companies finally bring themselves to raises prices, they only get half of what planned. As the need for more talent will seriously increase, students who focus on the pricing subject might be one step ahead of others at the moment they enter the career market.

The importance of pricing knowledge development at student level - and herewith stimulate a new generation of professionals starting their careers with fundamental and applied knowledge in the pricing area - is the driver behind the European Best Pricing Master Thesis Award.

The winning student will receive an astonishing cash reward, an ePP Pricing Training of choice, and a bundle of pricing books. Any student graduated from a European University or Business School at Master level may enter the competition.

The Pricing Thesis Award 2011 - 2012 is made possible by our sponsors. Interested to become a sponsor of this award or to join the jury, please contact joyce.verfaillie@pricingplatform.eu

Are you currently writing a pricing thesis or do you know somebody? Do not hesitate to contact me directly or complete the application form: http://www.pricingplatform.eu/site/public/thesis_award.asp

The European Pricing Platform (ePP) is the first - independent - European platform focused to support pricing decision makers in a wide variety of industries and sectors.

Sponsors:

Pricing pressures is one of the main concerns for EU companies!

2011-10-14T02:23:00-07:00

In today’s global economy, organizations are facing unprecedented pricing pressures as they deal with volatility in the commodities markets, currency fluctuations and unyielding international competition. To help mitigate the challenges, a number of world-class companies are turning to pricing software recommended by organizations from McKinsey, to Gartner and KPMG. In fact, both McKinsey and Gartner indicate that raising prices by 1-2% reaps margin increases up to nine percent.

A recent survey by audit, tax and advisory services firm KPMG reflects these findings. In its annual survey of manufacturing executives from global companies, almost 80 percent of respondents indicate they are cautiously optimistic about prospects for growth in the next 12 to 24 months. Almost half of the survey participants believe that price volatility in raw materials and inputs remains the biggest challenge, followed by increased competition, pricing pressure and uncertain demand. EU companies in the survey noted that pricing and competition were at the forefront of their concerns.

To better manage volatility, KPMG respondents indicate they are reshaping their pricing models, with pricing identified as one of the key strategies.

“With recent strike action linked to demands for salary increases above inflation, increases in the price of electricity and other infrastructure, tolls and the slowdown in manufacturing output, this has put severe pressure on company’s margins,” said Gavin Maile, KPMG’s Africa Head of Diversified Industries. “Pricing is a powerful and proven strategy for improving top-line growth and profitability, yet few organizations know how to do pricing well.”

“As organizations navigate the challenges of raw materials and currency volatility, pricing remains at the forefront for many companies as they evaluate new opportunities to increase margins, market share and business agility,” said PROS Europe General Manager Wagner Williams. “The ePP’s Manufacturing PricingFuel Day will provide organizations with a fresh perspective on the power of prescriptive pricing with success stories that uncover its strategic value.”

The European Pricing Platform (ePP) will host its Manufacturing PricingFuel day on Oct. 27 at the Sheraton Munchen Airport Hotel. This event will illuminate how innovative manufacturers can integrate pricing and product strategies to achieve exceptional growth and profitability in this changing environment. An unparalleled group of speakers from some of Europe’s most prestigious organizations will participate: Merck, Novozymes, Schindler Deutschland GmbH, Armacell European Sales GmbH, Spenncon AS, PROS Pricing and Deloitte.

Practical information

Venue : SHERATON MÜNCHEN AIRPORT HOTEL

Date : 27 October 2011, 9.00h. - 17.30h.

Language : English, GermanFurther information or registration: Britt Dejager: +32 (0) 51 320 372

Rate : € 595,00 for full day attendance (inclusive 6-month free participation to the Pricing Platform), second person can register for € 495,00. Bulk rates for groups are also available.

britt.dejager@pricingplatform.eu
Website for information : http://www.pricingplatform.eu/site/public/pricingfuel_days_detail.asp?id=7

Pricing of the Apple iPhone 4S

2011-10-05T05:15:00-07:00

Apple iPhone 4S pricing designed to widen its appeal

Apple concentrates on price rather than innovation to widen customer base; Samsung and HTC premium phones likely gain advantage, but lower prices put pressure on Nokia and RIM, say analysts

Apple’s strategy with the newly unveiled iPhone 4S is all about selling more phones. Rather than putting an innovative but more expensive device in the hands of a smaller audience, it has opted to target the mid-tier consumer and widen its customer base.

The move is being seen as Apple’s attempt to grow its market share in the face of the Android onslaught spearheaded by Samsung, HTC and others.

Apple’s is ranging the iPhone 3GS free on a two-year contract, while the iPhone 4 model will be cut to just the 8GG version, priced at $99. The iPhone 4S 16GB will cost $199, the 32GB $299 and the 64Gb will cost $399.

Francisco Jeronimo, research manager, European mobile devices at analyst IDC, said: ‘Despite the upgrades and the new iPhone 4S released, the announcement is all about price positioning. The new prices announced to the new iPhone 4S and previous iPhone versions allow Apple to compete in the price segments where Android is fiercely growing, the mid-range.

‘Apple will attract first-time smartphone users and users from mid-price Symbian devices looking for an upgrade, but will it attract current iPhone users to replace their current iPhones? Definitely not!

Jeronimo believes this will provide an opportunity for Samsung and HTC’s premium handsets to increase their market share as iPhone 4 users look for an alternative.

‘The Samsung Galaxy S II has been a major hit around the world and a serious competitor to the iPhone. HTC has also been increasing market share in the high-end segment,’ said Jeronimo. ‘Without a significant hardware differentiation there's no strong incentive for a massive replacement, as users can just upgrade their iPhone 4's with the new iOS 5.’

Jeronimo pointed out that Apple will be ‘better positioned to compete in the mid-range segments and increase its presence in the emerging markets, where price is still a major factor on the purchasing decision’.

He went on to say that Nokia and Research in Motion should be the most threatened phone makers. ‘If price was an inhibitor for consumers to move from their Symbian or BlackBerry based devices to the iPhone, now they have the change. Today Apple entered the mass market game, hopefully not leaving the innovation and coolness to their competitors.’

Editor: James Atkinson

Source: http://www.mobiletoday.co.uk/News

Executive Forum on Pricing for B2B Companies by Vendavo

2011-09-07T08:32:00-07:00

www.vendavo.com

Hear directly from executives of European companies who have implemented Vendavo and are realizing value today. Share information and tips with peers at companies in various stages of advancing their pricing capabilities – from just starting a pricing initiative to pushing the envelope. Plus, see the latest from Vendavo on pricing best practices and cutting-edge product innovations.

This highly interactive event will focus on:
- Pricing best practices for B2B companies- Customer presentations and panel discussions- Playbooks to implement and execute on pricing strategies- Networking opportunities with peer companies and Vendavo customers
- Interactive sessions with peers and pricing experts
- Vendavo University Bootcamp.

Who should attend?
Sales, Marketing, Pricing, and Finance Executives who are involved in pricing functions including:- Analyzing pricing and profitability- Setting prices for products and services- Administering prices and guidance for sales team as well as channel partners- Managing deal profitability and approvalsLearn from pricing professionals and our experts about how you can leverage pricing best practices to drive profits globally.

Vendavo University Pricing Bootcamp NEW!
Vendavo University is pleased to offer a complimentary pricing bootcamp session as part of the Executive Forum on Pricing agenda. During this bootcamp session, you will learn:- Price waterfall basics- Relevant terminology- Examples of leveraging the price waterfall for analytical purposes

Cost
Complimentary (Invitation-Only)This event is by invitation only. Please contact britt.dejager@pricingplatform.eu if you are interested in attending this Executive Forum on Pricing.

For the full agenda, please contact Britt.dejager@pricingplatform.eu You can also reach Britt on his phone for further information: +32(0) 51.320.372

The Complete Guide To Freemium Business Models

2011-09-06T10:00:00-07:00

Editor’s note: This guest post was written by Uzi Shmilovici, CEO and founder of Future Simple, which creates online software for small businesses. The post is based on a study done with Professor Eric Budish, an economics professor at the University of Chicago Booth School of Business. It also includes ideas and comments from Peter Levine, a Venture Partner at Andreessen-Horowitz and a professor at Stanford GSB

The idea of offering your product or a version of it for free has been a source of much debate.

Pricing is always tricky. Unfortunately, many entrepreneurs don’t give it enough thought. They will often copy the pricing strategy of similar products, base their decisions on pompous statements made by “experts” or rely on broken rationale (we worked hard so we should charge $X).

Free is even trickier and with so many opinions about it, we thought it would be refreshing to take a critical approach and dive deep into why some companies are very successful at employing the model while other companies fail. We’ve looked into economics academic papers, behavioral psychology books and strategies that worked for companies to come up with the key concepts below.

The Law of Marginal Cost

Pricing plays a huge part in competing for customers. Here’s an economic law that holds almost as much truth as the law of gravity: in a perfectly competitive market, the long-term product price (aka “market clearing price”) will be the marginal cost of production.

Guess what? Because of declining hosting and bandwidth costs, for most Internet products the marginal cost today is practically … zero.

In other words, if the cost to serve a customer (support aside) is zero, the long-term price of the product in the market will be zero (because of competitive pressure).

An Experience Good

At the core of the “Free” models are the products or services being offered to the customer. Most Internet products or services fall into the definition of an Experience Good: a product that needs a period of use before the customer can determine the value they can derive from it.

A good example is Dropbox. Consider Drew Houston’s words: “The fact was that Dropbox was offering a product that people didn’t know they needed until they tried.”

There are plenty of academics who looked into the pricing of Experience Goods. In 1983, the Economist Carl Shapiro wrote a fascinating paper about this subject. His conclusion was that since customers tend to underestimate the value of a product, the optimal pricing for an experience good is a low introductory price which is then increased when the customer realizes the value of the product.

In some cases, a customer might overestimate the value of the product. In that case, the optimal pricing strategy is to charge as much in the beginning or to lock in customers with long-term contracts.

This is why customers are reluctant to buy when someone asks them to prepay for a service or product or sign a long-term contract.

Hence, the introductory price is a signaling mechanism. The conclusion? A low entrance price signals that you are confident that your product will create value for the customer.

The Psychology of Free

Much has been written about the Psychology of Free. Two books that looked specifically into the subject are “Free” by Chris Anderson and “Predictably Irrational” by Dan Ariely. Putting it simply, Free is an emotional hot button that immediately reduces the mental barriers for the customer. Free makes people think that they have “nothing to lose” since many ignore time as an investment.

From this perspective, free is a huge accelerator of adoption. The flip side of this is that after using the product for free, it is very hard to get the customer to start paying for it. This phenomenon was broad enough to get its own name: “The penny gap”—the hardest part is to get your customer to pay you the first penny. This is why it is so critical to choose your premium features wisely.

Decision Factors

If all that is true, it seems like Free (or Freemium) is the answer. Well…. not so fast. The decision is definitely not easy. Here’s a basic framework to help you make a more informed decision. A word of caution though: for every complex problem there’s a simple solution … and it’s wrong. The framework is helpful as a thinking tool but there’s no magic formula.

Here’s a set of questions that you’ll need to ask yourself:

How big do I want my company to be? If you are looking to build a lifestyle business that’ll make you $8,000 a month and you have a good product, you can probably do without Freemium. If you want to build a dominant company that has a substantial market share, Freemium can help you accelerate adoption.
What is the value of the free users? Across all successful Freemium companies, there is a way of making money or saving money from the free users. Either by saving on marketing costs (Dropbox) or by making money from ads or data (Pandora, Evernote, Mint) or both. If you cannot turn your free users into savings in marketing costs or revenues from third parties—figure out how!
What is the cost to serve free users? This is a critical aspect of the model. If you spend a lot of money and/or time servicing free users, you are going to lose a lot of money. The cost of servicing free users must be lower than the dollar value they provide.
How big is my market? “The easiest way to get 1 million people paying is to get 1 billion people using,” says Phil Libin, the CEO of Evernote. Free adds another conversion step on your way to revenues. You need a big market to have enough people who will be paying you at the end of the day.
Is there value to one customer from other customers using the product? This will determine how many new users the free users will refer. There are three levels of value:

Inherent value – You can use Skype only if the person you talk with also uses Skype. You can share a Dropbox folder only with other Dropbox users. In this case, Freemium can be a powerful strategy.
Added value – You wouldn’t want to be the only user of LinkedIn. You derive value from other people using it. In this case, Freemium can help you gain traction if you use an effective invitation mechanism.
No value – You don’t care if someone is using Evernote or not. The only reason for one person to tell another about the product or service is if they think it is awesome.

The Types of “Free”

One of the key factors in making Freemium work is the structure of the offering. What is it that you offer for free vs. charge? There are different types of free strategies. Let’s take a look at the popular ones:

True Freemium – Give a version of the product for free and charge a fee for the other versions. There are two ways to go about this:

Value based – The most successful type of Freemium strategy. The more a customer uses the product, the more value she derives, the higher the switching costs are, and at some point she’ll hit a usage limit and convert to a paying customer. Evernote and Dropbox are beautiful examples of this.
Characteristic based – For example offering the product for free for one user (so it is based on company size for instance). Let’s think about a B2B application. If I’m a freelancer, I will use the application forever and I will never have to upgrade. If I’m a 3-person company, I can’t add more users and try the application for real and hence might not get to the point where I see the value in using it.
Free Product for a Cross Subsidy - Give one product for free and charge for complementary products.
Time Based Free Trial – Give a free trial for X days and start charging once the trial ends. The issue here is figuring out what X is. On one hand you want to create a sense of urgency, on the other hand you need the customer to see the value in the system.

Open Source as a Free model

Lately I’ve seen many entrepreneurs confuse Open Source with Free so I thought it would be helpful to make the distinction. An open source model can definitely accelerate the distribution of your product and is a viable free model. It has two main advantages. You might get developers to contribute to your product (see WordPress). By doing that you can accelerate the development of your product. The other advantage is that you give customers peace of mind as they have control over the source code. You can then make money from selling pro features or value added services. There’s a critical distinction here and that is that your code is out there and anyone can start a company to commercialize this code. Bear in mind that it is very hard (often impossible) to reverse a decision to open-source.
The Last Bit And The Secret To Success

There are many factors to consider when you are evaluating whether to use the Freemium model or not. However, there’s one last secret that I didn’t share with you. During the study, while looking at the successful Freemium companies, a pattern emerged. They all had phenomenal products. All of these decision factors are useless if the product or service you are offering is nothing short of amazing. If your product is not creating great value for its users, no tactic in the world will make Freemium work for you.S

Source:

Techcrunch: http://techcrunch.com/

Image credit: Shutterstock/JelenaA

ePP is pleased to announce a new partnership with Pricing Solutions Europe AG

2011-08-19T07:40:00-07:00

The European pricing Platform (ePP) is pleased to announce that they have added Pricing Solutions Europe AG (PS Europe), a global pricing strategy, pricing management, pricing research and pricing consultancy firm as a new Expert Partner. Our new partner will be an exhibitor, and sponsor of upcoming ePP events throughout Europe. Furthermore they will provide ePP participants with relevant pricing content through state-of-the-art pricing: articles, white papers, research papers, academic papers, surveys, etc.

By delivering content through these resources, PS Europe contributes to improve the pricing knowledge of our Pricing Platform Participants.

“Pricing is right now a hot topic in most CEO’s mind.

Current market dynamics about raw materials rising costs, disruptions on the competitive landscape, mostly driven by BRICS, and some recovering markets niche’s opportunities are evidencing that organizations who have a good level on the Pricing discipline are outperforming the Market.

By their ability to price better their products & services, and be more agile against competitive and market reactions, they are able to manage more efficiently the money spent on Discounts, Rebates and others “Sales Levers”, and translate on their P&L the Value perceived on their products & services, ” said ‘Fernando Ventureira , Managing Director, Pricing Solutions Europe AG. “Partnering with ePP puts us in a position to divulgate better and more extensively the Pricing Discipline, at this time quite exclusive of professionals working on large and multinational organizations.”

Pricing Solutions Europe AG is an expert Consultancy in Pricing, with more than 20 years of experience and quite well known for the high standard deliveries on services related to People & Organizations (i.e. Training & Coaching), Pricing Management (i.e. Pricing Diagnostic & Roadmap for Excellence), Pricing Research & Analytics (i.e.: Value Map and Price Optimizer) and Systems & Tools (RFP Management & Business Intelligence).

“Pricing Solutions Europe AG has been carefully selected to join our group of pricing experts worldwide because of their proven track record, experience, and pricing science methodologies,” said Pol Vanaerde, ePP president. “We are pleased to have Pricing Solutions Europe AG included on our expert list, and look forward to working closely with them to better serve our participants.”

ePP serves as the first ‘Not-for-profit’ network for cross-industrial pricing decision makers in Europe. Through various on- and offline media, ePP is dedicated to develop and share pricing best practices, effective tools, methodologies and populate technological solutions assisting in successful definition and implementation of Strategic Pricing.

About Pricing Solutions Europe AG

Our mission is “To significantly improve our Clients Profitability by helping them achieve a World Class Level of Pricing Competency”

About European Pricing Platform

The ePP offers your company to have the right pricing tactics in place to guarantee customer loyalty and deliver sustained margin growth to your business. Enhance your pricing know-how and be successful in it by joining this dynamic and yet resourceful pricing platform.

The European Pricing Platform is pleased to announce that they have added Navetti AB as a new Expert Partner

2011-07-13T07:36:00-07:00

The European pricing Platform (ePP) is pleased to announce that they have added Navetti AB, a global expert on pricing know-how and pricing software solutions, as a new Expert Partner. Our new partner will be an exhibitor, and sponsor of upcoming ePP events throughout Europe.

Navetti will offer ePP participants with experience from true customer cases where participants will recognize its own situation and understand the value of implementing a global pricing strategy. Navetti has a strong track record of successful implementations of value based and market driven pricing strategies, methods and processes all supported in the Navetti PricePoint™. The main objectives from previous implementation projects have been;

· Improved price quality

· Improved customer trust

· Improved Profitability

· Improved efficiency,

all supported in Navetti PricePoint™ to secure sustainability.

“International companies have recognized the importance of implementing a global pricing strategy to secure profit optimization and manage all aspects of the price waterfall in a global business.” said ‘Andreas Westling, Senior Partner, Navetti AB.

“Partnering with ePP puts us in a position to reach a wider audience and provide guidelines to international manufacturing companies on the journey to pricing excellence.”

Navetti is an industry-leading pricing software supplier toward the manufacturing industry. Navetti offers both management consultancy services and license its own developed software solution Navetti PricePoint™.

“Navetti has been carefully selected to join our group of pricing experts worldwide because of their proven track record, experience, and pricing knowledge,” said Pol Vanaerde, ePP president. “We are pleased to have Navetti included on our expert list, and look forward to working closely with them to better serve our participants.”

About Navetti

Navetti has received recognition for its domain expertise in the field of pricing for international manufacturing companies, where price optimisation between markets and product families are critical. Navetti has over the years developed a solid value and- market driven based pricing methodology, that has delivered increased profit and pricing quality to its clients. The methodology in combination with Navetti PricePoint™, has clearly increased profit, customer trust and sustainability.

About European Pricing Platform

Source: Britt Dejager - European Pricing Platform & Andreas Westling - Navetti AB

When Advisors Add Value, Pricing Power Follows

2011-07-06T01:43:00-07:00

As the expression goes, when you settle for less than what you’re worth, you get less than what you settled for. Yet there's reluctance among many financial advisors to raise their prices for the services they offer, particularly after the 2008 crash damaged so many portfolios. Asset-based fees dominate the industry’s revenue stream, accounting for 85 percent of the total, according to the consulting firm FA Insight. Yet median fees as a percentage of assets under management were virtually unchanged between 2009 and 2010, the firm said.

Eliza De Pardo, principal and director of consulting at FA Insight, said just 31 percent of firms review their pricing strategy annually. It’s too bad, since there’s data showing that firms that review their pricing each year tend to have higher profitability per client. She understands the reluctance some advisors have about telling clients they want to charge more. “If the markets are declining, it’s a tough conversation to have with clients, obviously,” she told advisors during a pricing workshop at a recent Pershing Advisor Solutions conference in Manhattan. “The real question is, how do you deliver value, and can you communicate that to the client? If you can communicate it effectively, I don’t think anything’s off the table.”

One of the first places to start when reviewing what you charge is the condition of your local market, and the size of the fees your competitors are levying. De Pardo warns against placing too much weight on the latter, however, since all practices are unique. Advisors need to decide what pricing method is best for their practice—fees based on percentage of assets; flat or variable fees based on the advice needs of the client; hourly fees; or a fee that varies with the value delivered. Many advisors use a combination—an asset-based fee coupled, for example, with a flat fee for producing a financial plan. (Such fees may vary with the level of complexity required to produce the plan.)

Minimum fees help maintain profits; 57 percent of firms use them, FA Insight found. The median minimums range from $2,000 for firms with annual revenue of $75,000 to $500,000, to $5,000 for firms with revenues from over $500,000 to $3 million; firms with revenues greater than $3 million had median minimum fees of $9,000, the consultant said. Value-based pricing strategies are employed by 70 percent of the largest and most successful firms. Under those strategies, an advisor documents the financial savings that a client accrues through, say, lower insurance premiums or a reduction in personal tax liabilities through the advisor’s recommendations. The advisor would keep a percentage of the savings—maybe 20 percent—and add it to the regular fee that’s charged.

When preparing to raise prices, sit down beforehand and outline each argument that an unhappy client is likely to raise, De Pardo said, and prepare your counterarguments that demonstrate the value you’re providing. In addition to clarifying the case for your added value, she said, the exercise will help you feel less nervous when sitting down with particularly difficult clients. And be sure to share your value story with the rest of your staff, so they’re on board.

Advisors who want to charge more for their services have to differentiate themselves from their competitors, she said. Some regularly distribute e-mail newsletters on economic topics of interest to their clients, or organize luncheons for clients at which experts might speak about a particular topic. Investors recognize the value these things provide, De Pardo said. “Very rarely will a client say, ‘You know what? Keep the educational stuff.’ ”

Registered . Rep. The Source for Financial Advisors: By Jerry Gleeson

Disney pricing strategy: Seeking more profits out of long-term visitors

2011-07-06T01:16:00-07:00

Six years after Walt Disney World radically redesigned its ticket prices to steer guests toward longer stays, the resort is now aiming to wring more money out of passes once priced as irresistibly cheap.

During the past 10 months, the giant resort has begun increasing the premium it charges for longer ticket options — its five-, six- and seven-day passes — relative to the resort's single-day and shorter-term tickets.

It is a shift from the strategy behind Disney World's "Magic Your Way," the revamped pricing structure that Disney introduced at the start of 2005. That pricing scheme was designed to persuade travelers to make repeat visits to Disney World's four theme parks during their vacations by making the added cost for extra visits negligible — particularly when compared with the price of a one-day ticket charged by competitors Universal Orlando and SeaWorld Orlando.

The effect is subtle but significant. For nearly six years, even as it consistently raised its base ticket prices, Disney kept the added charge for upgrading from a five-day ticket to a six-day ticket — the point at which a traveler may be debating whether to visit a Disney theme park for a second time or visit Universal's Islands of Adventure for the first time — to no more than $3.But last summer, Disney raised that premium to $5. And this month, the resort boosted it further, to $8. That works out to a 167 percent increase in less than a year.The charge to add a seventh day has also jumped from $3 to $8 during the same period.Starting with the first adjustment to Magic Your Way in 2006, the difference between a four-day and a five-day pass also remained relatively constant — at $3 or $4 — until last year.

But it, too, has now jumped to $8.The figures are based on an Orlando Sentinel analysis of historical price data compiled by AllEars.net, a consumer website for Disney vacationers.Disney declined to discuss its pricing strategy. But other experts called the company's changes shrewd.With Magic Your Way prices now well-established, Disney appears to have successfully conditioned customers to seek out longer passes. Four-, five- and seven-day tickets are Disney World's most popular passes, according to industry analysts and former theme-park officials. Concentrating price increases on those ticket options now gives Disney the most revenue bang for its buck.In addition, "you assume that folks who are down [in Orlando] over a longer time frame are both more price elastic and dedicated to Disney," said Michael Nathanson, a stock analyst who follows theWalt Disney Co. for Nomura Securities.Focusing on its longer passes also allows Disney to ease off on the price increases for its basic, single-day tickets, which are rapidly approaching $100 — potentially a psychologically significant threshold. Although single-day tickets account for only a small percentage of Disney's total ticket sales, they are a widely used barometer of the industry's pricing overall and can affect travelers' perception of theme parks' affordability.

Disney World has made seven rounds of price increases since beginning Magic Your Way. During each of the first five, single-day prices rose by an average of 5.7 percent. But during the past two, they have climbed an average of only 3.8 percent. One-day prices are now at $85 before tax.Experts say Disney likely has other motivations for the shift, as well. Company executives are under pressure to boost theme-park profit margins, which shriveled during the global recession as Disney used steep discounts to continue luring travelers to its resorts.Lifting prices for the later days of Magic Your Way passes is an obvious target."If ticket prices are almost giving [the] park away beyond the four- or five-day products, at some point the financial model may not work," said Joseph Couceiro, a former chief marketing officer for SeaWorld Parks & Entertainment.There is a limit to how much Disney can squeeze out of such increases without undermining the overarching goal of Magic Your Way.

The ticket structure was designed, after all, to make it a no-brainer for guests to add extra days to their Disney passes rather than go somewhere else.Raising prices for those additional days could threaten that consumer calculus — just as Disney faces stiffening competition from other parks, particularly Universal with its year-old Wizarding World of Harry Potter."You have to walk gingerly to see how far you can reasonably push the envelope before you get consumer pushback," Couceiro said.For now, though, $8 for an extra day at Disney remains a tiny fraction of the one-day entry price to Universal or SeaWorld. And it's possible those other parks could face financial pressure of their own if Disney continues concentrating its price increases on its longer passes.Like Disney, both of the smaller parks have reshaped ticket prices in recent years to encourage multiple visits. Universal just last year launched a new price structure modeled after Magic Your Way, while SeaWorld has expanded multi-day ticket options with the opening of Aquatica, its 3-year-old water park.

But sales of single-day tickets remain a far more important revenue source for the smaller parks than for Disney. So if Disney makes only modest increases to its single-day ticket price — or even opts to hold it steady — it could put a disproportionate squeeze on Universal and SeaWorld, which typically match Disney's one-day price.Representatives for Universal and SeaWorld declined to comment on Disney's pricing strategy.

Publisher: Orlando Sentinel

Ticketmaster Aims to Fill Theaters with Dynamic Pricing

2011-04-20T08:24:00-07:00

Ticketmaster's CEO Nathan Hubbard knows he's got a major problem. Ticket sales were down by double digits, and 40 percent of seats went unsold last year.

Now, he has a solution, one he unveiled on CNBC's "Power Lunch" today. It's 'dynamic' ticket pricing, a technology developed with a company called MarketShare.

Instead of locking in a single price for tickets, the company is rolling out an approach similar to the airline industry's strategy to make every seat on the plane is full. The new variable pricing system will let artists and sports teams raise and lower ticket prices to reflect demand, while they're being sold.

If this strategy works, more of the seats that have been sitting empty will sell and promoters will be able to drop prices if they're not selling. If ticket prices more accurately represent their value to consumers, that could mean fewer tickets being sold at sky-high prices on the secondary market.

If tickets for a particular sporting event or concert are selling like hotcakes, the band or team can raise ticket prices—preventing them from selling for sky-high prices on Stubhub later.

And perhaps most importantly, it could mean consumers are more satisfied and less frustrated. And since Ticketmaster is a brand consumers love to hate, it could use the help!

Hubbard, a former musician himself, has been working on a number of key initiatives to make consumers happier and drive ticket sales. One tactic is to make ticket-buying social. Hubbard has integrated Ticketmaster into Facebook, so buyers can tell friends they've bought tickets to an event.

This helps spread the word—free marketing—and gets groups of friends to mobilize. Another strategy is interactive seat maps.

Now Ticketmasters gives consumers far more control over choosing seats in an auditorium.

And it's working. The conversion rates—number of people who actually buy seats after looking at them—has grown by over 25 percent.

Consumers will never want to pay fees for tickets, the question is whether Ticketmaster can be upfront about those fees, and make ticket pricing fair enough that it can keep music and sports fans from jumping ship to the competition.

And there's plenty of competition to go around: a range of companies are trying to take a bite out of Ticketmaster's business, from AEG, to Ticketfly, to a new startup Brown Paper Tickets. But Hubbard seems to get the threat these companies pose, and is trying to turn Ticketmaster into a kinder, gentler brand.

Source:

By: Julia Boorstin

CNBC Correspondent

Announcement ePP and OneTree Solutions S.A. partnership

2011-04-11T04:16:00-07:00

The European Pricing Platform (ePP) is pleased to announce that they have added OneTree Solutions S.A., a global software provider of revenue maximization solutions, as a new Technology Expert Partner, exhibitor, and sponsor of upcoming ePP events throughout Europe. OneTree Solutions will offer ePP participants the opportunity to discover more about value-centric pricing strategies, and how they can prevent revenue leakage and maximize revenue from every deal and contract.

“In today’s fiercely competitive landscape businesses are trying harder than ever to identify which levers can improve their revenues and sales, while protecting their customer relationships and margins. By uncovering and communicating the value of products and services to prospects and customers, businesses can stay clear from potentially unfavorable pricing practices and create room for more profitable value-based pricing,” said Denis Avrilionis, Managing Director at OneTree Solutions. “Partnering with ePP puts us in a position to highlight the importance of why businesses need to differentiate themselves and create value, and how a relatively small increase in their pricing can result in a significant increase in profits.”

OneTree's latest software –OT ReMax– is a revenue maximization solution, which empowers businesses to make the right decisions when it comes to preparing quotes and negotiating deals and contracts. OT ReMax answers the question ‘What price can I offer customer X and successfully close the deal without leaving money on the table?’ The solution allows businesses to scientifically align the pricing of every offer with the perceived value each individual customer has about the offering. OT ReMax optimizes the critical last mile of the sales process and provides accurate, contextual insights based on market, customer and product sales history; enabling businesses to optimize deals and win new business at satisfactory margins. OT ReMax has been specifically developed for businesses offering customized prices across various industry sectors such as Banking, Financial Services, Insurance, Utilities, High Technology, Pharmaceuticals and Manufacturing.

“OneTree Solutions has been carefully selected to join our group of technology experts worldwide because of their proven track record, experience, and pricing validation and control methodologies,” said Pol Vanaerde, ePP president. “We are pleased to have OneTree Solutions included on our expert list, and look forward to working closely with them to better serve our participants.”

To learn more about OT ReMax, visit www.OneTreeSol.com/otremax

About OneTree Solutions

OneTree Solutions S.A. (www.OneTreeSol.com) offers enterprise-class, asset-based solutions that help businesses and organizations to perform optimally. OneTree Solutions is part of the OneTree Group, which was formed in 2001 with a vision to change the way software is researched, engineered and delivered. By harnessing the latest technologies and through their knowledge of business domains, OneTree provides software solutions which offer a fast ROI and quick time-to-value.

OneTree is focused on yielding measurable benefits. Their core-asset approach guarantees robust software that's modular, scalable and customizable, resulting in solutions that empower customers quickly and effectively. OneTree continues to innovate with the development of SaaS-based software solutions; offering customers the flexibility to select what best fits their needs. The OneTree Group is based in Luxembourg.

About European Pricing Platform

Announcement ePP and Model N Partnership

2011-04-01T02:14:00-07:00

March, 2011

The European Pricing Platform (ePP) is pleased to announce that they have added Model N, a global software provider of revenue management solutions, as a new Technology Expert Partner, exhibitor, and sponsor of upcoming ePP events throughout Europe. Model N will offer ePP participants insights and lessons learned from dozens of global Revenue Management deployments as well as share best practices and strategies for successfully managing pricing within a holistic Revenue Management ecosystem.

“In a highly competitive and globalized marketplace, companies need to ensure their pricing and Revenue Management practices and processes are helping and not hindering efforts to protect and grow margins,” said Niels Skov, Managing Director, Europe, Model N. “We are pleased to partner with a highly regarded organization such as ePP. This partnership will provide an ideal platform to highlight the importance of integrating and aligning pricing with bid and tender, contracting, settlements, and other critical revenue life cycle processes to reduce financial risk and drive business value.”

Model N is the industry leader in Revenue Management solutions for Life Sciences, High Tech, and Discrete manufacturers. Leveraging a powerful combination of deep domain expertise, industry best practices, and breakthrough technology, Model N's unique approach recaptures lost revenue, provides powerful insights into business performance, and increases visibility and control across multiple organizations and geographies.

“Model N has been carefully selected to join our group of technology experts worldwide because of their proven track record, experience, and expertise in providing price and Revenue Management solutions to global organizations,” said Pol Vanaerde, ePP president. “We are pleased to have Model N included on our expert list, and look forward to working closely with them to better serve our participants.”

About Model N
With over $150B in annual revenues across 50 countries managed in our systems, Model N supports Life Sciences, High Tech, and Discrete manufacturing customers through their entire revenue life cycle across their pricing, bid and tender, contract, compliance, settlements, and channel processes. Our deep industry expertise and best practices, highly configurable applications, and comprehensive services support your organization on premise or in the cloud. Whether you are an emerging business or a global leader, Model N results in revenue. www.modeln.com

About European Pricing Platform

The ePP aims to ensure your company has the right pricing tactics in place to guarantee customer loyalty and deliver sustained margin growth. Enhance your pricing know-how and facilitate your pricing success by joining this dynamic and resourceful pricing platform. www.pricingplatform.eu

Amazon’s Android Appstore app Pricing Strategy Revealed

2011-03-17T01:58:00-07:00

With Amazon’s Android Appstore expected to launch later this month, the internet retailer is busy organising its store to soon offer applications to run on the devices it sells.

Today, a number of Android applications and their prices have leaked out after AndroidNews.de stumbled upon a placeholder page on the Amazon website. Whilst the retail giant will require Android users to download a third-party application to download the apps, Amazon will showcase apps on its product pages, listing them as recommended items as they would any other item.

The page was available at amazon.com/apps but has since been removed. Luckily, a number of screenshots were captured, showing what apps are likely to be available at launch and how much they will cost:

Amazon has already secured the exclusive launch of the next game from the incredibly popular Angry Birds franchise, Angry Birds Rio. With 48 other applications listed on the website, AndroidNews.de compared them and their Android Market counterparts, finding that Amazon has secured four other exclusive titles, including Call of Duty: Modern Warfare Force Recon.

The retailer has also priced 14 apps lower than the prices developers are charging for the same apps on Google’s marketplace. The strategy demonstrates how Amazon hopes to compete with Google – requiring developers to state the recommended retail price of their apps, changing its pricing should it see fit. Developers don’t miss out – if Amazon lowers the price of an app below the recommended price, they will still receive a share of the price they originally set.

Amazon has declined to comment on when its Appstore will launch – we think it won’t be too long until it does.

Source: The Next Web, Matt Brian

Buffett Says Pricing Power More Important Than Good Management

2011-02-22T06:02:00-08:00

Warren Buffett, the billionaire chief executive officer of Berkshire Hathaway Inc., said he rates businesses on their ability to raise prices and sometimes doesn’t even consider the people in charge.

“The single most important decision in evaluating a business is pricing power,” Buffett told the Financial Crisis Inquiry Commission in an interview released by the panel last week. “If you’ve got the power to raise prices without losing business to a competitor, you’ve got a very good business. And if you have to have a prayer session before raising the price by 10 percent, then you’ve got a terrible business.”

Buffett, 80, accumulated the world’s third-largest personal fortune through a career of stock picks and takeovers. He has bought companies such as railroads and electricity producers, whose pricing power stems from a dearth of competitive options available to clients. Buffett has also built stakes in firms like Coca-Cola Co. and Kraft Foods Inc., which rely on the appeal of their brands to attract and keep customers.

“The extraordinary business does not require good management,” Buffett said in the interview, which was conducted on May 26 in Omaha, Nebraska.

The FCIC investigators focused on Buffett’s investment in Moody’s Corp., the bond-ratings firm blamed by lawmakers for handing out inflated credit grades during the housing boom. Buffett said he held stock in Moody’s because the company’s leading market share, along with that of rival Standard & Poor’s, a subsidiary of McGraw-Hill Cos., gave the two firms flexibility in setting prices.

Pricing Power

“I knew nothing about the management of Moody’s,” said Buffett. “If you own the only newspaper in town, up until the last five years or so, you had pricing power and you didn’t have to go to the office.”

A dominant position can’t prevent a bad manager from destroying a company over time, said Benjamin E. Hermalin, a professor of economics at the University of California, Berkeley’s Haas School of Business.

“If you have a really dominant position you can survive for quite a long time with bad management but eventually it will catch up to you,” said Hermalin. “In the short run I would agree with Buffett but in the longer-run perspective there is something to be said for having a good manager.”

Burlington Northern Santa Fe, the railroad Buffett bought last year for $26.5 billion, owns more than 30,000 miles of track across the U.S. West connecting producers and distributors of coal, grain and consumer goods. Omaha-based Berkshire’s power company, MidAmerican Energy Holdings Co., sells electricity to homes in the Great Plains and transports natural gas from Wyoming to California.

Praise From Buffett

Buffett routinely singles out and praises managers from Berkshire’s more than 70 operating companies. MidAmerican Chairman David Sokol and Gregory Abel, the unit’s CEO, are “two terrific managers,” Buffett said last year in his letter to shareholders. The acquisition of Burlington Northern had the “additional virtue” of bringing the railroad’s CEO, Matthew Rose, to Berkshire, Buffett said.

Buffett criticized Kraft Chief Executive Officer Irene Rosenfeld last year for her takeover of Cadbury Plc and the sale of the foodmaker’s pizza brands. “Both deals were dumb,” Buffett told Berkshire investors in May. Berkshire is the biggest shareholder of Kraft with a stake valued at $3.3 billion at the end of December.

“In the short run, good management can make a stock pop but I follow what Warren’s saying, especially because his point of view looks at the fundamentals,” said Terry Connelly, dean of the Ageno School of Business at Golden Gate University in San Francisco, and a former managing director at Salomon Brothers. “Good management can’t do anything with a bad case.”

Source: By Andrew Frye and Dakin Campbell

Tarmac Selects PROS Software to Help Achieve Strategic Pricing and Profitability Goals

2011-02-02T06:54:00-08:00

HOUSTON--(BUSINESS WIRE)--PROS (NYSE: PRO), the world leader in enterprise business-to-business pricing and margin optimization software, today announced that UK-based Tarmac selected PROS during the fourth quarter of 2010 as the key enabler of a new pricing strategy designed to simplify pricing processes, grow profitability of special products, increase sales with growth customers and provide offers tailored to the unique needs of their customers.

Tarmac is a cement and aggregates process manufacturer with operations throughout the United Kingdom. Tarmac produces aggregates such as crushed rock, sand and gravel used in construction, asphalt for roads, and cement, concrete and mortar. Tarmac is part of Anglo American, a UK-based global mining company.

"Choosing PROS was ultimately an easy decision,” according to Chris Mabbott, team lead for vendor evaluation at Tarmac. “PROS invested time in learning our business and clearly demonstrated how its solution would drive value across all our pricing objectives. PROS also proved it wanted our business by being the only vendor to visit our sales people in the regions. PROS references were also substantially better than any competitor -- the biggest differentiator for Tarmac

Tarmac will leverage the value of prescriptive pricing embedded in all three advanced pricing modules of the PROS Pricing Solution Suite, including Scientific Analytics, Price Optimizer, and Deal Optimizer. The three modules work seamlessly together to support the entire pricing lifecycle, from identifying pricing opportunities, to setting pricing strategies, to executing optimized prices.

“We’re honored to have been selected by Tarmac, PROS first customer in the quarrying and construction industry,” said PROS general manager for Europe, Wagner Williams. “Bringing Tarmac on board as a PROS customer is a sign that more companies are focusing on the power of advanced pricing technology to fuel both top- and bottom-line growth, and that PROS can deliver on the promise of pricing.”

The PROS solution will enable Tarmac, like many other B2B manufacturers and distributors, to realize significant benefits:

•Improve the accuracy and effectiveness of price setting to drive revenue and margins, and prevent price erosion

•Develop greater insight into customer profitability and enable pricing strategies tailored to specific sales channels and segments

•Improve agility and customer satisfaction through simplified and more effective pricing processes

•Gain greater clarity into sales performance management and empower sales teams to increase sales with growth customers

“One of the biggest challenges for manufacturers in commodity industries is making accurate, timely pricing decisions in a climate of increasing competition and complexity,” explained Andres Reiner, president and CEO of PROS. “We look forward to working with Tarmac to increase their ability to make smart pricing decisions that support their corporate goals and help make pricing a strategic competitive advantage for Tarmac in their industry.”

About Tarmac

Tarmac is the UK's largest quarrying company and the supplier of materials to the construction industry, and is a market leader for aggregates, ready mixed concrete and asphalt. Other parts of the business include; Tarmac National Contracting (the UK’s largest road maintenance and contracting firm) and Tarmac Buxton Lime and Cement. The company has been involved in some of the UK's biggest construction projects including Wembley Stadium, Emirates Stadium, the M1 widening and M25 resurfacing.

http://www.tarmac.co.uk/

About PROS

PROS Holdings, Inc. (NYSE: PRO) is a leading provider of prescriptive enterprise pricing and margin optimization software products, specializing in price analytics, price execution, and price optimization. By using PROS' software products, companies gain insight into their pricing strategies, identify pricing-based profit leaks, optimize their pricing decision making and improve their business processes and financial performance. PROS' software products implement advanced pricing science, which includes operations research, forecasting and statistics. PROS high performance software architecture supports real-time high volume transaction processing and allows PROS to handle the processing and database requirements of the most sophisticated and largest customers, including customers with 100's of simultaneous users and sub-second electronic transactions.

PROS provides professional services to configure its software products to meet the specific pricing needs of each customer. Founded in 1985, PROS has implemented over 500 solutions across a range of industries in 50 countries. PROS is headquartered in Houston, Texas and has over 350 employees, more than 100 with advanced degrees and over 25 with Ph.D.s. To learn more about PROS, please visit www.prospricing.com.

Forward-looking Statements

This press release contains forward-looking statements, including statements about the functionality of the PROS products and their ability to manage and forecast across an enterprise. The forward-looking statement contained in this press release are based upon PROS historical performance and its current plans, estimates and expectations and are not a representation that such plans, estimates or expectations will be achieved. Factors that could cause actual results to differ materially from those described herein include PROS ability to develop new products and product enhancements with the required functionality desired and PROS ability to implement and support successfully its products to the expectations of its customers. Additional information relating to the uncertainty affecting the PROS business are contained in PROS filings with the Securities and Exchange Commission. These forward-looking statements represent PROS expectations as of the date of this press release. Subsequent events may cause these expectations to change, and PROS disclaims any obligations to update or alter these forward-looking statements in the future, whether as a result of new information, future events or otherwise.

Digital Media Require New Pricing Methods - How to take advantage from better pricing -

2011-01-14T05:43:00-08:00

The emergence and rapid growth of internet has made it an important media for distributing digital products including: news, books, journals, music, and videos, searching and online services. computer software, stock quotes and financial information. However, the distinctive characteristics of digital products, such as a significant investment cost to produce the first copy, low marginal production cost, low distribution cost, indestructibility, transmutability, and easy to reproduce, suggest that the traditional pricing policies may not apply. Yet, little has been written on pricing for digital products distributed over the internet, and so far few businesses offering digital products have made money on the internet.

The emergence of the internet offers great business opportunities. Many commercial enterprises (especially those based on information-intensive products and services), therefore, are rushing into the online world and new businesses are emerging to provide brand new digital products (services included) to both consumers and organisations. But most businesses ignore that the nature of the electronic marketplace is fundamentally different from that of the physical marketplace and treat commerce on the internet as only an extension of existing business or as an alternative distribution channel. They try to apply old business rules and traditional pricing policies to this brand new environment, and this explains why so far few of them have made money there. This phenomenon implies that traditional business and pricing rules are not applicable, and we need to use fundamentally different models in decision making.

These developments are creating new opportunities for repackaging products or using more efficient pricing strategies through bundling, site licensing, subscriptions, rentals, differential pricing, usage-based pricing, micropayment and various other mechanisms. In addition to this, transmutability of digital products makes them highly customizable and detailed and personal data of consumers are more abundant and easy to gather in computerized market environment. As a result, consumers obtain a higher degree of satisfaction from customized products than average-quality products, and prices can efficiently reflect costs and consumer preferences. Yet, little has been written on pricing for digital products distributed over a digital network. Therefore get inspired by peers on the European Pricing Platform and hear how they manage those challenges.

Practical Information

Workshop: Pricing of Digital Information

Speakers: Deloitte & Elsevier

Venue: Landgoed de Horst - De Horst 1, 3971 KR Driebergen, The Netherlands.

Date: 01 February 2011 van 13.30u until 18.00u

Price: € 330,00 - free for ePP participants

For further information of registration: Call Britt Dejager: +32 (0) 51 320 372 /britt.dejager@pricingplatform.eu

Website for information : http://www.pricingplatform.eu/site/public/workshops_detail.asp?id=76

The European Pricing Platform (ePP) is a ‘Not-for-Profit’ knowledge sharing place focused to support business management, pricing professionals and CxO-level executives in Europe over a variety of industries and sectors. Our target is to update the pricing know-how of the business manager.

Source : European Pricing Platform (ePP) (www.pricingplatform.eu)

Author: Britt Dejager - project manager at European Pricing Platform

Winner Pricing Thesis Award 2009-2010 !

2010-12-09T00:50:00-08:00

December 2010- The European Pricing Platform announces with great pleasure the new winner of the Best European Pricing Master Thesis Award 2009-2010.

With his thesis “Barriers to Value Based Pricing Strategies within Irish Small to Medium Sized Enterprises: A Quantitative Survey Analysis”, Eoin Healy – Dublin City University Business School – convinced our jury that he had the most complete pricing thesis of the other 6 theses that were selected. Eoin won a € 500,00- cash reward, a bundle of books worth € 75,00- a free ePP training of his choice valued at € 1.500,00- and free ePP participation for 12 months worth € 395,00- .

The jury motivated their choice as following: “Very professional thesis with clear steps in study design that is straight in our core business. The methods and objectives are well formulated and the thesis has a really scientific methodology. In general the thesis gives a valuable empirical contribution to the value of pricing research.”

The motivation of Eoin to dedicate his thesis to pricing topic came from the lack of time contributed to pricing during his masters in Marketing, as opposed to branding, distribution strategies or buyer behaviour. Eoin says: “ I found this odd as I had read about the power of pricing in terms of the profitability of a firm. So I begun researching the topic of pricing within academic databases and of course on the web. This is how I came to find the ePP and its pricing thesis award.” By knowing that there was a competition to enter Eoin made his definite choice to devote his thesis to pricing.

The reason why Eoin choose to provide a piece of literature for Small and Medium Sized business within Ireland, was because they make up the majority of business types within the Irish market. His study highlighted both the importance of value based pricing to them while at the same time pointed to reasons, or barriers, why they might not yet be using value based pricing strategies. Therefore Eoin says: “I felt it would be most appropriate to analyse them in the interest of the larger Irish economic context. Through research, value based pricing was picked as my strategy of choice due to the fact that it is said to result in greater profitability to the firm and it can ultimately result in a sustainable competitive advantage!”

At the finish of his thesis Eoin concluded that there is still so much to learn on pricing in the whole marketing community, but particularly also amongst the academics. They should revisit how important pricing actually is as an element of the marketing mix and spend much more time on sharing information and knowledge about it.

Eoin finishes with an important conclusion: “Pricing I believe is one of the most frightful and misunderstood elements in most marketers toolbox and it is only through learning more about pricing that we will over come that fear. This I feel, is where organisations such as the EPP can help.”

Need a Pricing Strategy ? Fire a customer

2010-12-08T08:36:00-08:00

If you haven't walked away from a piece of business in the past six months, then it is very likely that your company doesn't have a pricing strategy.

In other words, you are trying to be all things to all people, and that is not a strategy. In fact, it could have a detrimental impact on your business because it means that highly price-sensitive customers will infiltrate your company and obtain pricing that is well below what your loyal customers who value your offering pay.

I've learned that it's not the best customers who get the best price; it's the best negotiators. We call them "system beaters." They know where the holes are in your pricing — how to get premium products at discount prices, or secure special discounts by making your salespeople feel guilty or afraid of losing their business. They might also negotiate free delivery, demand an unusually high level of technical support, pay bills late — the list goes on.

So how do you deal with customers who have champagne tastes but want to pay beer prices? If you want to ensure that your company's pricing integrity is not compromised, you must walk away from them. By doing so, it energizes your company to focus on the opportunities that will grow your business — and, most importantly, increase your profits.

Before you fire an account, it's a good idea to do a customer-profitability analysis. That will enable you to identify which accounts are unprofitable, so you can reprice or fire them.

Recently, I was talking to the president of a successful company that had lost an account that represented 25% of its sales volume. Sounds like a disaster, right? Wrong! Even though sales went down, profits went up! This is not an unusual story. Most companies have many customers that are unprofitable, and the best gift you could give the business is to fire these accounts. Some of them may be willing to pay the higher price, but don't fret over those that won't; let them take their unprofitable business to your competitors. Be prepared, however, for resistance from the sales force, particularly if they are paid commission on volume. (We'll talk about that topic in our next column.)

We recently had a client who was selling a seasonal product to a large chain retailer, while the volume was outstanding, the profits were unsustainable. They had a negative margin on the product, meaning that the more they sold, the more money they lost. The retailer had convinced them that no other suppliers had taken a price increase.

Looking at the data, we found that the rest of the category had been increasing prices while our client had been offering more and more, effectively decreasing their prices. We put together a sound business case to support a double-digit price increase and worked to bring the account team on-side. The manufacturer felt they deserved the increase and their conviction to the business case resulted in a successful presentation to the retailer.

If you are not prepared to fire customers, an alternative is to offer versions of your product or service offering. Take, for example, a company that specialized in storage. It had premium clients in the pharmaceutical industry that used its storage facilities because of the high level of security, temperature control and 24/7 access it provided. However, it also had low-priced accounts that appreciated the superior offering, but were not willing to pay for it. Consequently, the pharmaceutical customers asked for the same prices as the lower-priced accounts. A potential disaster!

In order to do business with both types of customers, the company built a separate storage facility for low-value products. By doing so, it reduced its cost to serve and was able to offer lower prices profitably. The pharmaceutical companies were not interested in this option because they valued the superior security and other benefits, and so the problem was resolved.

Whether you choose to walk away from your unprofitable customers, or provide versions of your offering, don't let them sip on champagne when they paid for beer.

Source: Paul Hunt (Pricing Solutions) for Financial Post

OFT urges brands to review "misleading" Price Ads

2010-12-02T05:46:00-08:00

Retail and brand marketers are being urged to review their pricing strategies by the Office of Fair Trading (OFT) or face tough “enforcement action” following its report into misleading price advertising.

The OFT says it recognises that advertising price is a “key part of active price competition which benefits both consumers and the economy” but warns that some pricing practices can mislead consumers and break the law. The watchdog says it will “actively monitor” price promotions and “take targeted national enforcement action against firms using practices that constitute serious breaches of the law”.

The OFT supports the Advertising Standards Authority (ASA) which regulates the content of ads and sales promotions in the UK. The report identified seven potentially misleading pricing practices as part of a new framework to regulate price advertising.

Drip pricing, where additional costs are added during the buying process, time limited offers and baiting sales, where only a small proportion of stock is available at the advertised price, were identified as the most harmful to consumers.

Despite recent criticism, buy one get one free (BOGOF) deals were seen as one of the least harmful practices.

Under the new framework, companies such as RyanAir which use drip pricing throughout the booking process and retailers such as Marks & Spencer which has been accused of bait selling with its recent £10 champagne offer, could face court action and fines.

The British Retail Consortium slammed the report saying that consumers benefit from the competition and are good judges of the best deals. Tom Ironside, BRC director of business and regulation, says: “Customers aren’t stupid. They make sophisticated judgements about prices and value within stores, between stores and over time and have all the information they need to do that.”

The OFT seeks to reassure “fair dealing businesses” that they should not be concerned that they risk enforcement action on trivial matters. John Fingleton, OFT chief executive, says: “Misleading pricing is not only bad for the consumer, it is also bad for competition, and creates an uneven playing field between fair dealing businesses that stick to the spirit of the law, and those that push the boundaries too far. “We urge all firms to review their pricing practices and to get their houses in order where necessary.”

The Institute of Promotional Marketing welcomed the OFT’s report and says: “Price promotions that are deliberately designed to confuse and mislead consumers are simply not acceptable.” The IPM says it will look to incorporate the findings into its best practice guidance.

The seven pricing practices investigated are:

Drip pricing - where optional price increments such as taxes, card charges and delivery charges are added during the buying process
Time-limited offers - for example “offer must end today”
Bait pricing - when consumers are drawn in with offers of discounts although few items are available at the discount price
Complex pricing - for example offers where the price depends on numerous elements which may be conditional on each other
Reference pricing - such as “was £100, now £60”
Multiple unit price promotions - such as “three for two”
’Free’ products offered as part of a package - such as “first two months free

Source: Rosie Baker, Marketing Week

Top 5 Pricing Trends for the Holiday Season

2010-12-01T03:26:00-08:00

With the holiday season upon us, many retailers are wondering what pricing strategies they should implement to price for profit and growth.

This year, more than ever, the U.S. is a “have” and “have not” economy. On the negative side, consumer sentiment remains low and the unemployment rate continues to sit at 9.6%. However, there is positive news: Personal expenditures were up by 2.6% in the third quarter, the Dow Jones Index is over 11000, corporate profits are on the upswing and unemployment has stabilized (albeit at an unacceptably high level).

Bottom Line: A new opportunity exists this holiday season to serve cautiously confident consumers who, due to pent up demand and an interest in treating themselves, are willing to open their wallets.

Trend 1: Tailor your pricing strategy to your customer:

•In economically-depressed areas, continue the status quo pricing strategy of recent holiday seasons: focus on staple products, offer financing and layaway plans.

•In cautiously-confident markets, there is an opportunity to sell higher margin luxury products and services.

Trend 2: Show customers why they should purchase your product:

•In previous holiday seasons, price was the key driver of sales. This holiday season, cautiously-confident customers are willing to pay a premium for unique features (for instance, ads for Apple’s MacBook Air highlight its thinness).

Trend 3: Feature upscale “reach” products to cautiously-confident consumers:

•While the basic version of an upscale product may be discounted to attract consumers, reap higher profits by offering upgrades as well as complementary products.

Trend 4: Welcome cautiously-confident consumers back with new pricing plans:

•Offer generous financing and layaway plans.

•Minimize risk with “satisfaction guaranteed” pledges.

•Offer lower cost options such as “basic” versions, rentals, and leases.

Trend 5: Offer experiences to cautiously-confident consumers

•After years of pinching pennies, consumers are willing to splurge on fun experiences.

Source: Rafi Mohammed, FOXBusiness