Getting pricing right starts with understanding value
Pricing is one of the most important decisions you’ll make. We think it stands to reason – it has a direct and immediate impact on your profit and ultimate success. But the value you offer, set against the way you present it, sits at the heart of pricing. In short, pricing and proposition go hand-in-hand.
We can help you to get this right. We understand the ways that pricing and value proposition can be influenced by market and customer forces. How it can be tricky to understand, requiring both flexibility and questioning, backed up by continuous monitoring and controlling. Most importantly, we’ve seen, across our portfolio, how success relies on being prepared to review and tweak things – sometimes, even, to radically change things – to make sure you continue to stay on top.
Learning to say “no”
Ullink provides global, multi-asset trading technology and infrastructure.
As a result of their sales team, increasingly, selling complex, multi-component software solutions, requiring ‘non-standard’ professional services and coding, the organisation was struggling to meet demand, in a timely manner. Customer satisfaction was down and so was profit margin.
The first thing Ullink did was look at ways to get everyone in the organisation thinking the same way and sharing objectives. Then we considered ways to increase communication. We introduced a ‘deal desk’ – where leaders from each region meet in a weekly meeting to consider materials prepared ahead of time by Sales and the regional Managing Director, and to make ‘go/no-go’ decisions on ‘non-standard’ deals.
Being prepared to walk away from a deal that is not strategically relevant, or profitable, has required a shift in thinking across the organisation. This ‘deal desk’ approach has not only increased internal transparency but has improved strategic focus. The result is that profit margins have seen a significant improvement.
“If I could only keep one meeting in my calendar, it would be this. It has had a huge impact on our business – increased transparency, ensuring profitable sales, and knowing it’s ok to say no.”
Didier Bouillard, CEO, Ullink
Reconsidering pricing and proposition
e-conomic is a Danish provider of SaaS accounting tools, including invoicing and expenses products for SMEs.
To start with, e-conomic sold standalone solutions – each designed to catered to different customer needs. However, there was very little cross- and up-selling. Although there was an internal belief that prices could “probably be increased” there was little factual understanding of customer groups and associated value, to back this up.
We initiated a comprehensive customer research project. Through a combination of a large scale survey, backed up with customer phone calls we studied the needs, value proposition, pricing models and willingness to pay.
As a result of this research e-conomic introduced a ‘slimmed down’ version of its core solution (at a lower price point), as well as a premium solution, combining many of the previously additional modules. This new package offering, based on customer feedback and understanding, resulted in generally higher package prices and a greater uptake of add-on modules, via the premium solution. Most significantly, by understanding consumer needs and willingness to pay, the solutions reduced customer loss and resulted in double digit revenue growth, year on year.
Having agreed ways to measure your success and business growth are important. We believe the most successful organisations measure and manage their performance against the following operational metrics:
- 80%+ share of subscription revenue
- Contractual price increase allowances of 7%+ p.a.
- 80%+ of revenue contracted with price increase allowances
- ~20% of deals involving escalations or exceptions
- 90%+ price realisation vs. list price
- Understanding the customer ROI delivered