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As we approach 2020, there is simply no excuse for making value and pricing decisions without good information. The risk is just too high. Price is one of the most powerful communications you have with your customers. Your pricing decisions potentially impact your entire customer base and revenue stream. You need to get these decisions right, and the cost of information is inconsequential relative to the risk and potential reward.
The good news is you can find out almost anything you want with a little effort. For example,
Win-Loss Monitoring is a foundational tool. We recommend having it done by a third party because it eliminates the inherent bias we all have when we evaluate ourselves. Win-Loss Monitoring lets sales, marketing and pricing keep their finger on your customer’s pulse.
Historic Transaction Analysis is a gold mine for both price management and strategy. If you are looking for incremental margin, this is the place to begin.
Competitive Benchmarking and Assessment. Pricing power comes from meaningful differentiation, i.e. the degree to which you are different from your competition. To make money in the XaaS world, it is no longer sufficient to match the services of your competition. Rather you must differentiate yourselves based on them. Competitive analysis is a good starting point.
Tradeoff Analysis. When you really want to understand the forces underlying customer behavior, you need to understand how they make tradeoffs. No customer ever has all the budget they want, so they make tradeoff decisions to identify their priorities. Tradeoff techniques like conjoint, discrete choice and max-diff can put you behind your customer’s eyeballs to see their hidden agenda. Research employing tradeoff methods can often lead to a step change in product pricing strategy performance.
Sales and Channel Research. Your sales organization and channel partners can provide a wealth of information on how well your value prop is working for customers, on how well your channel strategy is working, how well your pricing strategy is working, and how well your pricing is working. Channel partners can also be a good source of competitive intelligence.
Market Modeling. In much of our quantitative pricing research, we build models of our clients markets. These models can then be used to optimize pricing decisions to achieve desired financial or market performance outcomes. These can be done for products, services or a portfolio. Optimization models are especially useful in SaaS pricing strategy, as you try and balance multiple objectives in the transition from on premise products. The overriding goal is to optimize business performance across the migration.
Free Business Impact Valuator
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Using our Business Impact Valuator you can estimate the impact of better pricing on your firm. Choose an area of interest, answer a few questions, and receive a complimentary report on that topic.
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To have a more detailed look at your situation and get some fresh ideas on how you can drive more profitable growth, take the next step and speak with a consultant.