1.4% ROS
Captured Revenue After
First Quarter
$8.5M
Impact from Pricing
Best Practices
$1.2M
Impact from New
List Prices
The Challenge
The client’s challenges across price setting, execution & monitoring were rooted in the approach to pricing strategy – pricing processes were informal and poorly documented. The company knew it was at risk of falling into costly ad-hoc pricing habits, considering growing pressure from low-cost competitors, new entrants and product commoditization.
The company felt this ‘pricing strain’ across 5 different business units which represented over USD $870M. To overcome the challenges and capture more profit, the 5 units of the company partnered with the Pricing Solutions team.
Oil & Gas Industry
The Oil and gas industry plays a crucial part in the world economy. Traditionally, companies have faced strong competition from both local and international players, making it essential, yet difficult to communicate the value of their offerings.
Building a Solution that Fits
Pricing Solutions conducted a strategic pricing transformation project lasting a total of 16 weeks and uncovered multiple pricing opportunities in the Deep Dive (Figure 1). The team worked closely with the client to address each of the four key pricing process areas.
Pricing Solutions targeted the client’s challenges across price setting, strategy, execution and monitoring.
Even within the early stages of the project, the company began achieving real pricing improvement. The project included:
1. Pricing Process and Infrastructure Diagnostic
• Pricing Solutions conducted internal interviews and surveys in order to understand the extent of clients pricing capabilities
• Client received a full Process & Infrastructure Assessment score to benchmark the company’s progress.
• The diagnostic also provided an initial hypothesis for how the clients overall pricing strategy could be improved.
2. Quick Wins Module
• Launched in Week 7, the module is based on the Preliminary Diagnostic results.
• Pricing Solutions identified top priorities and action items to automate pricing dataflow and develop KPI dashboards.
3. Implementation Support
• The manufacturer began executing a comprehensive World Class Pricing Roadmap to stabilize the pricing organization at Level 2 in Year 1, and then advance to Level 3 in Year 2.
• Pricing Solutions conducted two training workshops with key stakeholders in all BUs, ensuring full capabilities transfer with the cross-functional project team.
• Pricing Solutions conducted internal interviews and surveys in order to understand the extent of clients pricing capabilities.
The Result?
The project had significant financial implications across all 5 business units. In total, the captured revenue at the end of the first quarter was 1.4% ROS, or USD $12.1M. The areas of improvement included:
- New list prices, re-defined by past-transactional analysis and value assessments
- Introduced best-practices related to annual price increases
- Changes to the efficiency and consistency in the client’s pricing policies
In addition, new sales tools including execution guides, monitoring tools, and an exceptions process, maximized Quick-Wins.
The Pricing Solutions Difference
Pricing Solutions integrated approach to pricing strategy uncovered quick wins and long-term capabilities the client hadn’t previously considered. With ‘deep dive’ into the project through the diagnostics, clear action items and support of the new pricing, our client changed their pricing trajectory and realized new implications for growing incremental revenue and annual profit. In this project example, the Net Promoter Score (by project participants) totalled 83%.