Pricing and profitability management
The problem with pricing
Strategic pricing is often hard to manage because there is incomplete knowledge of all activities and how to coordinate them.
Often each business function – finance, marketing, sales and operations – work with a different set of data to make pricing decisions. Each function can also define goals and reward performance using different metrics, sometimes conflicting with each other.
Effective pricing management can help you increase profitability by improving the way you analyse, set and deliver prices.. The tools and discipline of pricing and profitability management address the immediate issues presented during economic instability, and position a company for long-term growth. A comprehensive pricing strategy has multiple layers creating a foundation for price setting:
- The foundation of strategic pricing determines the best value for the customer.
- The next step is to establish the price structure,. pricing a product to match the delivered value and cost to serve.
- Marketing can then develop the price and value communication to the customer.
- The pricing process must stand up to aggressive customers and competitors – it should influence expectations and not react to them.
Deloitte is routinely ranked as the top pricing practice in the world by leading analysts. We offer an end-to-end approach to improving the entire spectrum of pricing capabilities, not just bits and pieces.
- Price optimisation
- Process improvement
- Organisation design
- Transaction analysis
- Technology selection and implementation
- Change management
We have the people and tools to put it together.
Tangible and immediate bottom-line benefits of a Pricing Programme
- Add 1 to 3 percent of addressable revenue to the bottom line in the first six to 12 months
- Deliver better visibility to pricing and margin information to improve decision making
- Increase control of transaction profitability through active management of pricing execution
- Reduce margin leakage by improving measurement and management of sales activities
- Improve customer profitability by linking cost to serve with pricing levels