The Pricing Paradigm has been added to your bookmarks.
The Pricing Paradigm
Driving profitable growth through strategic revenue management
Pricing is one of the most powerful levers for driving profitable growth. Effective pricing strategies accurately reflect a company’s value proposition, increase willingness to pay, and drive gains in market share. One key is an understanding of how value is created and how to align a revenue model with a customer’s buying process. In addition, the disruptive forces of the Digital Era are profoundly impacting how companies create and capture value through Pricing. For example, the blurring of value chains and channels into B2B2C ecosystems, new business models that enable competition on subscription/consumption basis, personalized offers that match customer’s needs based on their digital behavior, the use of cognitive and AI for insight-driven pricing algorithms, and the use of Cloud for cost-effective and scalable pricing solutions are all significant opportunities for companies today.
Deloitte named a global leader in Pricing Consulting by ALM
Deloitte was recently named a global leader in pricing consulting by ALM, in their report entitled Pricing Consulting 2017. The report notes, “Deloitte combines extensive experience serving diverse clients in a variety of market conditions with nuanced point of view on the critical disruptive forces that will impact pricing in the future."
Source: ALM Intelligence; Pricing Consulting 2017; ALM Intelligence estimates © 2017 ALM Media Properties, LLC. Reproduced under license
The pricing paradigm
Pricing is as much an art as it is a science. Set your prices too high and price-sensitive customers will go looking for a better deal from someone else. Set them too low and you’ll be leaving precious revenue on the table. We help clients get their pricing right by showing them how to find the sweet spot where value and revenue meet, how to establish confidence and discipline among their sales teams during pricing negotiations, and how advanced data and analytics can help increase both competitiveness and customer loyalty.
Our pricing and profitability practice has also authored two top-selling pricing books. The Strategy and Tactics of Pricing: A Guide to Growing More Profitably is now in its sixth edition and remains the best-selling book on the topic, and Pricing and Profitability Management: A Practical Guide for Business Leaders presents a pragmatic approach to driving profitable growth for any company.
Our valuable experience is augmented by Polaris™, our proprietary insight-driven commercial analytics platform that serves as the basis of a sustainable pricing capability.
Our strategies and insights have helped our clients across a wide range of industry sectors meet and exceed their most ambitious top- and bottom-line growth goals.
How we can help
Monitor Deloitte's Pricing and Profitability Management practice works with CEOs, CFOs, CMOs, and CIOs to address all aspects of pricing strategies and processes and to align the organization's capabilities with its business, market, and channel strategies.
As a leading strategy consulting practice, our team includes recognized thought leaders and authors on pricing strategy, along with advanced data modeling specialists who will work with you to address the key questions and issues affecting pricing, including:
- How can pricing be used to improve both top- and bottom-line performance?
- How can a firm's revenue model be redesigned to better align with a customer's buying process—and thereby increase willingness to pay?
- How can pricing help improve the predictability of earnings, and help manage risk?
- What pricing policies can help enforce and proactively manage profitability?
- How can we more effectively capture the true value of our products and services?
- What quantitative and qualitative capabilities do we need to efficiently set and manage pricing?
- How can pricing help us compete in a disruptive market?
- What capabilities are required to enable the pricing function?
Deloitte's proprietary tools
Deloitte's proprietary tools and methodologies, combined with our deep industry and technical experience, mean we're uniquely positioned to help your business leverage pricing and profitability management strategies for a sustained source of competitive advantage designed to help you outperform your peers and improve your overall market value.
We draw from a suite of diagnostic tools to quickly assess profitable revenue management opportunities that typically reside in the following six areas:
- Transactional management systems that help guide the proper execution of your chosen strategy
- Price and discount policies that align your pricing with the value delivered
- Value and communications framing strategies to help you present customers with the most compelling value stories
- Segmented pricing and offering structures based on customer willingness to pay and perceived value
- A profitable growth strategy that allows for a definable and adaptable business model that can change to meet shifting market conditions and customer demands
- Strategies for addressing competitive pricing actions
Our capabilities, resources, talent, and experience around pricing and profitability are unmatched.
For nearly three decades, The Strategy and Tactics of Pricing: A Guide to Growing More Profitably has served as a leading authority on strategic pricing. The book, now in its sixth edition and written by two Deloitte thought leaders, brings new perspectives, case studies, and updated approaches from this ever-evolving practice.
This knowledge, combined with Deloitte's proprietary resources—including PolarisTM—informs strategies and insights we have applied to help clients achieve revenue increases of up to 20 percent, and margin improvements as high as seven percent across all aspects of the pricing lifecycle.
The true value of a carefully crafted pricing strategy is its ability to create a loyal customer base and a sustainable growth rate. Some keys to achieving these goals include:
- Understand how value is created and delivered: Clearly link your offerings with the benefits they offer your customers and set your prices to capture a share of that value.
- Improve your analytical capabilities: Develop a pricing dashboard to detect margin leakage, and to respond more quickly to pricing opportunities or threats. Establish a clear perspective on your most and least valuable products, customers, salespeople, and partners.
- Optimize your pricing capabilities: Rigorously assess your standard and promotional pricing to determine what needs to be true for a price change to be successful.
- Invest for the long haul: Develop the skills and processes, data, and tools necessary to turn your pricing decisions into strategic capabilities, and make margin management a visible part of the executive agenda.
B2B. B2C. We’ve got you covered
Whether you're running a business-focused enterprise or a customer-facing organization, we have the know-how to help you maximize value through pricing.
We help B2B clients:
- Develop pricing strategies to address new product launches and respond to competitive pressures
- Configure offerings across their product and services portfolio
- Identify and quantify value and develop value-based customer segmentation
- Develop pricing policies and processes to influence customer behaviors and work effectively with channel partners
- Harmonize prices across channels and geographies
- Establish deal desks to develop effective response strategies to customer procurement processes
- Design pricing organizations and governance structures
- Develop analytical and visualization tools and implement pricing/CPQ technologies
- Analyze customer, product, and salesperson profitability
We help B2C clients:
- Set a pricing vision that aligns to the company's overall business strategy
- Focus on a lifecycle approach to pricing across base price, promotion price, and end-of-life procedures (markdown
- Drive favorable price perception by identifying key value items, and establish a product availability promise on the products that matter most to customers
- Implement category roles and design base price logic (e.g. size relationships and rules, private label strategy) to present logical prices on the shelf and raise prices smartly on select products where the customer is insensitive to price, and drive margin for the business
- Establish clear promotional objectives and a toolkit to design and measure effective promotions and offers (depth and frequency)
- Personalize price to the customer
- Move beyond marketing and merchandising to integrate day-to-day pricing and promotion decisions with an organization's key initiatives like digital, loyalty, and customer engagement
As a managed, on-demand solution customized for select industries and sectors, PolarisTM can give companies the best of both worlds: time-tested tools and technology without the challenges, costs, and delays of application development, management, and maintenance.