Pricing with Confidence E-Book

Reed K. Holden

• Herausgeber: John Wiley & Sons
• Kategorie: Fachliteratur
• Sprache: Englisch

Seitenzahl: 347

Veröffentlichungsjahr: 2010

Beschreibung

Bad pricing is a great way to destroy your company's value, revenue, and profits. With ten simple rules, this book shows you how to deliver both healthy profit margins and robust revenue growth while kicking the dreaded discounting habit. The authors destroy the conventional wisdom that you have to trade margins for revenues and show you how to fully exploit the value your company offers customers. This is a proven plan for increasing sales without sacrificing profits.

Leseprobe

Table of Contents

Title Page

Copyright Page

Dedication

Praise

Acknowledgments

Introduction

You’re the Salesperson

10 Rules of Engagement

What Is Your Pricing Purpose?

Yes, but We Need to Meet the Numbers

Cycles of Desperation

The White Horse Syndrome

A Fool’s Game

Do You Understand Your Value?

Price versus Value Focus

Don’t Bomb Your Competitors Back to the Stone Age

Tough Sales Negotiations

The Customer Is Not Always Right

RULE ONE - REPLACE THE DISCOUNTING HABIT WITH A LITTLE ARROGANCE

If You Don’t Think You Can Control Price Discounting, You’re Right

Who Gets and Gives Price Discounts?

Be Willing to Fire Unprofitable Customers

How Effective Are Your Price Discounts?

Control Discounting with Rules of Engagement

Notes

RULE TWO - UNDERSTAND THE VALUE YOU OFFER TO YOUR CUSTOMER

Winning the Pricing Game

The One Definition of Value that Matters Most

Adopting a Value Mindset

Why Talk to Customers about Value?

Customers Want to Talk about Value

How Does the Customer Get Financial Value from the Use of the Offering?

Overview of the Process

Preparing for and Conducting the Interview

What to Do with the Results of Your Conversations

Creating High-Impact Value Propositions and Sales Tools

Better Value Propositions and Customer Targeting

RULE THREE - APPLY ONE OF THREE SIMPLE PRICING STRATEGIES

The Three Basic Pricing Strategies

How to Choose a Pricing Strategy

The Role of Value in Pricing Strategy

Pricing through the Product Life Cycle

Be Prepared to Change

Pricing Strategy for Capital-Intensive Businesses

Pricing Strategy for Businesses with High Up-Front Costs

The Competitive Landscape and Pricing Strategy Options

Final Thoughts: Be Prepared to Change Your Strategy

Notes

RULE FOUR - PLAY BETTER POKER WITH CUSTOMERS

Price Buyers

Value Buyers

Relationship Buyers

Poker-Playing Buyers

How to Identify a Customer’s Behavior

Watch for Customers Who Behave as Price Buyers

Purchasing Agent Tricks to Get You to Cut Your Price

How to Respond to Each Behavior

The Importance of Trust

Play Better Poker

Services Are Not a Commodity

Notes

RULE FIVE - PRICE TO INCREASE PROFITS

Move from a Revenue to a Profit Focus

Efficiency First

The Cost of Average Costing

Price Like the Airlines—Almost

Dumbbell Pricing

Using Price to Control Utilization

RULE SIX - ADD NEW PRODUCTS AND SERVICES THAT GIVE YOU NEGOTIATING FLEXIBILITY ...

The Problem with Using Pricing to Drive Growth

Innovate for Growth, Price for Profits

The Basics of a Good Offering Structure

The Critical Role of Services and Solutions

Developing Services and Solutions to Create Pricing Leverage

Why Good Fences Make Good Neighbors

The Final Piece: Bundling

The Nuts and Bolts of Bundling

Don’t Bungle the Bundle!

Final Thoughts

Notes

RULE SEVEN - FORCE YOUR COMPETITOR TO REACT TO YOUR PRICING

The Problem of Market Elasticity

A Pricer’s Dilemma: Learning the Pain of Decreasing Price in a Mature Market

Developing a Competitive Information System

Take the Six Steps

Building the Global Chessboard

RULE EIGHT - BUILD YOUR SELLING BACKBONE Teach Your Sales Force and Managers ...

It’s Easy for You to Say

The Selling Problem

Prepare for Tough Negotiations

Step 1: Conduct Value Analysis

Step 2: Conduct Buying Center Analysis

Step 3: Evaluate the Likely Buying Behavior

Step 4: Determine Your Coverage Strategy

Step 5: Offering Development

Step 6: Develop the Primary Negotiating Approach

Step 7: Determine the Expected Customer Response

Step 8: Develop a Secondary Negotiating Strategy

What about RFPs?

Notes

RULE NINE - TAKE SIMPLE STEPS TO MOVE FROM COST-PLUS TO VALUE-BASED PRICING

The Ultimate Objective

The Two Levels of Pricing

The Pricing Maturity Model

Criteria for a Confidence-Building Pricing Process

A Coherent Pricing Strategy

Final Thoughts

RULE TEN - PRICE WITH CONFIDENCE: REMEMBER WHO YOU ARE

Support the Value Leader

A Process of Discovery

Sales’ Role in Customer Value

Why Most Companies Fail

Go on a Value Hunt

Confidence in Value Breeds Confidence in Pricing

Notes

INDEX

Copyright © 2008 by Holden Advisors Corp., Concord, MA. All rights reserved.

Published by John Wiley & Sons, Inc., Hoboken, New Jersey.

Published simultaneously in Canada.

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Library of Congress Cataloging-in-Publication Data:

Reed K. Holden, Mark. R. Burton

Pricing with confidence : 10 ways to stop leaving money on the table/

Reed K. Holden, Mark R. Burton.

p. cm.

ISBN 978-0-470-19757-8 (cloth)

1. Pricing. 2. Service industries—Prices. I. Burton, Mark, 1965- II. Title.

HF5416.5.H647 2008

658.8’16—dc22 2007033362

Dedicated to: Carolyn Holden Co-Founder and President Who made this book a reality and John A. Burton Wish you could be here

The essence of strategy is the efficient allocation of scarce resources so as to maximize their return to the organization.

—David C.D. Rogers

ACKNOWLEDGMENTS

Books like this don’t just spring out of the authors’ collective wisdom; they come from what is learned in interactions with a wide range of professionals over the years. These are the people in the arena who have learned good pricing practices through experience. While it’s impossible to name everyone, we’d like to thank some special people who have provided an incredible amount of support and insight.

When we started Holden Advisors, we did exploratory work on our new Value Discipline model with a number of pricing, marketing, and sales managers who provided terrific insights for the start of this work: Lewie Miller of Sant Corp., who is also on our board of advisors; Chris Hylen, now of Intuit; Scott Zimmerman of GE Medical; Greg Reid of Yellow-Roadway; Michael Bogosian; Ray Sharpe of Isola; Dan Thornton, now of RR Donnelley; Alan Yamamoto of IBM; Mary McMahon of Unisys; our good friend David Phillips of Vulcan Materials, who also advised on this book; Debra Meredith of Cardinal Presource; Alan Hollander, now of Avaya; Brian Weinstein of Monster Worldwide; Joe Marigliano, now of American Standard; Joe Megan of Metavante; Josh Rossman, now of Microsoft; Navdeep Sodhi of Kennametal; Frank Connoly of Harris Interactive; Joe Panaro of MasterCard International; and Andy Slusher of Yellow-Roadway, who was also an advisor on book content; and, importantly, Eric Mitchell and the team at Professional Pricing Society.

As the book began to develop, we relied on a kitchen cabinet of external advisors to help us shape title, primary content, and graphics. These people did great work in providing valuable insights quickly so we could meet our deadlines. While all content and recollections are ours and correct to the best of our knowledge, we’d like to thank the following for their insights and support: Dirk Meyer, and Marty Seyer of AMD; Henri Richard of Freescale. David Phillips of Vulcan Materials; Ron Baker of The Verasage Institute; Denise Hansard of Thermo-Fisher Scientific; Adele McLean of ICan Solutions; Jim Geisman of MarketShare Inc.; Dan Nimer; Sam Wee of SAP; David Sugano of Schering Plough; Tom Snead; Mike Twamley of Standard & Poor’s; John Sleeting of General Electric; Brent Melancon of Medtronic Cardio Vascular; Andy Slusher of YRWC; Lydia Zownirenko Kersey of Pass & Seymour; Lewie Miller of Sant Corp.; Mike Allen, who also serves on our Board of Advisors; Gene Zelek of Freeborn & Peters, who also serves on our Board of Advisors; Andy Stotler of BASF; Bob Cross of Revenue Analytics; Judith Weiss; and Laura Ramos of Forrester Research.

We couldn’t have done this project without the ongoing support of our colleagues at Holden Advisors. This includes Nelson Hyde, Ann Marie Trebendis, Steve Haggett, and our Co-Founder and President, Carolyn Holden.

We’d also like to thank those who have moved on to different pastures yet helped in the early research for the model insights for the book: Rachel Jacobson, Mike Lawson, Susanna Barmakian, Curtis Bingham, Andrew Namiot, and Ellen Quackenbush. We’d also like to acknowledge the good work of Andrew Holden from the University of Massachusetts and Professor Richard Hanna of Boston College.

The core book team was made up of a number of dedicated and talented individuals headed up by Carolyn Holden to whom this book is in part dedicated. John Kador is our internal editor who provided terrific help in converting our pricing-speak into language for nonpricing professionals. John has been a great partner and facilitator of our writing process and he has become a respected friend. Tom Sant of Sant Corp. and Hyde Park Partners gave us an early critique on writing styles that helped shape our new directions. Our editor at Wiley, Richard Narramore, who, along with Tiffany Groglio, provided valuable insights for the positioning of the content. Kim Railsback did great work on the book cover and allegedly used one of the authors for a model. Victoria Webber of Graphware provided tremendous feedback and helped with all of the book’s internal graphics.

INTRODUCTION

WHY PRICING IS SO HARD AND WHY MOST COMPANIES MESS IT UP

You’re the Salesperson

Imagine you are a salesperson trying to sell a product for $10,000. The customer’s purchasing agent responds that a competing supplier is selling a similar product for $8,000.

What would you do?

Let’s look at your options. If you have pricing authority, you can choose to match the price of the lower offer. If you can’t control price, you go back to your manager or pricing department and ask them for the authority to match the competitor’s price. If you get it, maybe you’ll be lucky: The customer will sign with you for $8,000, and you’ll earn your commission. But most salespeople in this situation know the outcome will be different.

Salespeople know the situation will typically play out as follows: The purchasing agent won’t be content with a $2,000 discount. The buyer will go back to the losing supplier and get them to lower their price even further, starting a back-and-forth process that we call the pricing death spiral. This process, where smart buyers try to squeeze every last penny out of their vendors, is good only for the buyers. With a pricing death spiral, there are no winners. Only survivors.