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The survey confirms what we have discovered first hand during the EPP HighTech Forum in 2013. Senior Management in European High-Tech companies are increasingly focused on further developing pricing and profit optimisation skills in their organisation. Read all the details here!
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European Pricing Maturity2013Results and key findings - HighTech Industry
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Results and key findings - HighTech Industry
HighTech respondents score significantly higher than any other industry on their pricing maturity. They come in ahead of all the rest at 2,62.
When looking at the possible reasons, we discover that 86% have more than 15 people working exclusively on pricing globally, with the remaining 14% having between 8 and 15 people focussing on pricing.
Significantly, approximately 71% of respondents have held their pricing function for more than 3 years.
All respondents indicated that they are convinced that a price optimisation strategy is a “must have” business initiative which has to be worked on continually, and with support from the top.
Big data analytics form a substantial part of the strategic arsenal with which every respondent in this sector handles their pricing and profit optimisation.
Perceived pricing maturity 2,57 = LEVEL 2
Actual pricing maturity 2,62 = LEVEL 2
Ambition within 12 months3,36 = LEVEL 3
HighTech industry – observations
Highest pricing maturity in Europe
Figure 1: Distribution of respondents within the HighTech industry
Figure 2: Distribution of respondents within the HighTech industry
Source : EPP European Pricing Maturity Study – 2013
Source : EPP European Pricing Maturity Study – 2013
Perception Reality Ambition
Level 1: Price list maintenance
14,29% 28,57% 0%
Level 2: Transactional control
28,57% 28,57% 28,75%
Level 3: Full value capturing
42,86% 42,86% 57,14%
Level 4: Full profit optimisation
14,29% 0% 14,29%
perception reality ambition
14%
29%
Level 1:Price List Maintenance
You try to sell anything to anyone at all prices
29% 29% 29%
Level 2:Gain transactional control
and optimize
You sell the right products to the right cutomers at the
right prices
43% 43%
57%
Level 3:Full Value Capturing
You sell segmented solutions at value based
prices
14%
0%
14%
Level 4:Profit Optimisation
You develop end-user solutions with different
revenue models
CHASM0%
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Results and key findings - HighTech Industry
The survey confirms what we have observed first hand during the EPP HighTech Forum in 2013. Senior management in European high-tech companies are increasingly focused on further developing pricing and profit optimisation skills in their organisations. They have indicated the topics on the right as key focus areas for the coming 12 months:
The collective goal of the HighTech respondents is to understand the value attributes of their offering, as well as the value per attribute better, so that this can be used in value based pricing per segment. Another point for improvement is the use of price elasticity analysis in predicting and anticipating the outcome of pricing decisions.
Periodic reporting and net prices per customer / segment / channel need to be available so that the sales force can perform what-if analysis to guide them in offerings. Cost price evolution needs to be readily available and immediately shared with relevant pricing decision makers, who should in turn receive a signal to check sales price of particular items which had an increase/decrease in cost price. Price promotions need to be systematically monitored and discussed with marketing/sales to come to better insights for next promotions.
Need to evolve to a stage where permission to overrule prices in the system is very limited, and controlled/monitored by price management team. Root causes of price overrides need to be investigated to decrease occurrence.
Price policy & setting
Monitoring
Organisation & Governance
HighTech industry – gap analysis
Source : EPP European Pricing Maturity Study – 2013
Source : EPP European Pricing Maturity Study – 2013
Reality Ambition
Price Strategy 3,07 3,64
Price Policy & Setting 2,40 3,24
Discounting strategy 2,71 3,29
Price Execution 2,52 3,29
Monitoring 2,29 3,11
System & Tools 2,64 3,36
Governance & Org. 2,63 3,43
Tendering 3,24 3,57
Figure 3: Gap analysis: HighTech industry
Figure 4: Distribution of maturity scores across components of the pricing framework
TenderingGovernance & Org.
System & ToolsMonitoring
Price ExecutionDiscount Strategy
Price Policy SettingPrice Strategy
Actual PMI score
0.00 1.00 2.00 3.00 4.00
Gap with Ambition
0.330.80
0.710.82
0.760.57
0.830.57
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Results and key findings - HighTech Industry
43% of HighTech respondents make use of tendering.
While about two thirds of the group indicate that they are satisfied with their current performance on tendering, the remaining third indicate that they still need to improve the following aspects during the coming 12 months:
Install a margin improvement plan with specific margin targets and responsibility for reaching it before the tender is submitted.
Apply an aggressive overall price strategy, taking into every item in the tender.
Use a formal life time value calculation when evaluating your tenders, taking into account year-end rebates and bonuses of sales team.
If you would like more information or to arrange an informal discussion on the issues raised in the EPP European Pricing Benchmark Study and how they affect your organisation, please contact:
Project Manager:Nicolene [email protected]
President & Founder of EPP:Pol [email protected]
Satisfied with current performance
Improve margin
Improve pricing strategy
Life time value calculation
HighTech industry – Tendering
