Price and Value Management Final

©2010 PROS Holdings, Inc. All rights reserved.Pricing Executive Summit Pricing Executive Summit

Brian SharpValue Management Practice Lead

Price & Value Management Why Not Take Both Paths to Profit?

©2010 PROS Holdings, Inc. All rights reserved.Pricing Executive Summit

Discussion Flow

Are we price managers or value merchants?

Packing the essential tools

Choosing the right path

Reaching the summit

Wrap-up


Maximizing the profit captured by the enterprise

Creating measurable, differential value for the value chain

What is value management?

Value Capture

Value Creation

1

2


Process ExcellenceTools & Software

Leadership & Learning

Value in Market

Value in Innovation

4

Pricing and transaction management are components…

The value merchant’s role

Pricing Strategy

Transaction Management


TRANSACT

Sense

Set

Manage

Convey

Value vs. Price spectrum

Who?

What?

Why?

When?

Where?

How?

How much?

• Segmentation & Targeting

• Offer• Brand

• Value Proposition• Differential Value

• Commercial Roadmap

• Channels• Geographic markets

• Customer Engagement Process

• Price/Value• Volume

Value Management


Discussion Flow




Reaching the summit

Wrap-up


Four basic tools to guide any journey

0

2

4

6

8

10

12

Freq

uenc

y

Price

Pricing Band Analysis

Dealer List Price

Invoice Price

PocketPrice

Economic Value Estimation

Value Map

Pocket Waterfall

Price Band

Value Management

Price Management


How is value measured?

Two Schools of Thought

“Value is Relative”- -

Perceived Value

“Value is Quantifiable”- -

Economic Value

Value mapsPrice vs. performance

Relative market position

Waterfall chartsEconomic Value Estimate

Return on investment

Decision to use oneor both depending

on the uniquesituation

Tools

Alignment of Price and Value


Relative Perceived Value

Worse Value

Fair Value Line

Better Value

The Value Map shows the position of each competitor in terms of the overall cost versus the overall benefit.

School #1: Perceived Value

Inferior Superior

Higher Cost

Relative Price

Lower Cost

Economy

Average

Premium


A Value Waterfall is used for estimating the economic value-in-use of solutions. This tool is most effective when your business has a clear economic advantage over a specific competitor and when it is logical that the

customer would monetize the relative benefits of your offer.

$ Variance Benefit

vs. CurrentSolution

Current Solution

Break Even

Savings

School #2: Economic Value


Discussion Flow




Reaching the summit

Wrap-up


12

The conventional route to the summit

Strategy Development and Planning

Execution

Performance Tracking and Evaluation

Develop Pricing

Strategy

Set Base Prices

Develop Pricing

Structures

Develop Pricing Policies

Set Sales Targets

Communicate List Prices

Develop and Administer Customer

Agreements

Determine Offers and Negotiate

Deal Prices

Collect Revenue and

Process Credits

Monitor and Analyze

Revenue and Profitability

Assess Performance

Against Targets

Recommend Corrective

Actions


13

Consider all of the available routes

Order Fulfillment

Product Life Cycle Management

Customer Engagement

Enabling Systems & Capabilities

Leadership & Learning

InformationSystems

Suppliers Customers

Customers


14

Why not start with the customer engagement process?

•Issues •Tactics

•Negotiations

Plan Engagemen

t

Assess Needs & Value

Refine Offer & Value

Proposition

Present & Deploy Solution

Assess Results

Sense

ManageConvey

Measure

Plan

value analysis

offer managementvalue communication

value quantification

segmentation


15

What role can we play in the new product development process?

value hypothesis

transaction model

price and positioning

demand & revenue management

OpportunityIdentification Business Case

Market /TechnicalValidation

Commercial Readiness Execute Launch


16

Start small. Get some wins. Determine if a process exists…Help define the process Pick one or two stages of the process to improve Customize the tool kit Test the approach Train the organization Replicate and scale up


Discussion Flow




Reaching the summit

Wrap-up


Price Orientation

Theoretical Value

Commercial Value

Conveyed Value

Accepted Value

Transacted Value

Captured Value

Value Share

Communication Gap

Segmentation Gap

Negotiation Gap

TransactionGap

Value Orientation

Reaching the summit. Navigating the crevasses.Which trailhead?


Take multiple routes

Value in Innovation

Transaction Management

Pricing Strategy & Structure

Value in Market


Contact Information

Brian Sharp

919.428.4495

[email protected]

Documents

Price and Value Management Final