Starting situation – inadequate transparency, owing to a perceived lack of relevance
With base prices and quantity prices subject to differing rebates and discounts, it was clear that price management was something of an afterthought at this waste management company. There was no connection between the pricing strategy and the corporate strategy. Although there was an awareness of the impact of pricing on value creation for the company, this was not pursued consistently enough. One reason for this was that implementing the pricing strategy at the operational level was seen as an insurmountable barrier. Additionally, the company’s focus was on cost positions and asset positions, and everything was micromanaged from this perspective. As a result, the impact of pricing measures was underestimated, and value potential was overlooked.
Project approach – realizing value potential through targeted price management
The need for a universal control approach that connected corporate strategy with price setting, price enforcement, and price measures monitoring called for a consistent and transparent procedure. The former system, which had evolved over time, needed to be dispensed with. It was replaced with an integrated price management system that was focused on value creation. The pricing throughout the entire company was analyzed, and a standardized pricing strategy defined. Since a strategy bears fruit only if it is implemented in real life, suitable tools were established for supporting the operational implementation. Thanks to ongoing monitoring of the implementation, pricing became a genuine value driver. The predetermined and implemented strategy resulted in a huge reduction in pricing complexity.
Pricing – pricing power and pricing strategy: variables that are often underestimated
The impact from pricing is often more profound than is generally assumed. The potential for pricing to have a direct and substantial effect on value creation is often underestimated. If a pricing strategy takes into account the differences between the various business units and is underpinned by ongoing communication at the operational level, success is the logical consequence.
- Sales efficiency increased through price optimization.
- Price established as a genuine value driver.
- Greater sales efficiency, resulting in enhanced sales skills.