Simon-Kucher: 7 trending pricing topics to consider

Arjen Brasz, Manager at Simon-Kucher & Partners, a consulting firm specialised in among others pricing strategies, lays out seven trending topics that can help executives improve their pricing power and capitalise on new profit growth opportunities. In his view, pricing is too often neglected as a source of innovation and driver for profitable growth, despite its “substantial” potential in impacting revenues, and more importantly, direct impact to bottom-line profitability.

1. Pricing power as new leadership priority
8 out of 10 companies suffer from increasing price pressure. Companies persistently underestimate the direct impact of price on the bottom line and their ability to influence prices. In 2015, make pricing a number 1 leadership priority to build pricing power.

2. Pricing innovations successfully
An important way to escape price pressure is through new product innovation. Our recent Global Pricing Study shows that almost 72% of all new products are not able to attain their profit targets. In 2015, make pricing an integral element of your innovation process.

3. Reinventing your price model
66% of companies are considering changing their price and revenue model, as intelligent answer to increasing price pressure. Whilst there are many industry changing examples such as EasyJet and Netflix, price model innovation can in practice be much more instrumental. In 2015, innovate your pricing model to tap into new revenue growth opportunities.

4. Making omni channel pricing work
Online sales figures are increasingly strong year-on-year in many industries. Although the online channel is growing in importance, pricing still proves to be challenging for many companies. In 2015, develop an omni channel pricing strategy which stimulates rate parity.

5. Structured value selling
Procurement has witnessed a faster and significantly more profound professionalisation process than sales over the last decades. In 2015, develop your sales staff into trained value sellers to defend the value and price you deserve.

6. Smart price perception management
Every purchase decision is heavily influenced by the price perception of your customers. Improving price perception is not the same as slashing profits, as a portfolio-wide price reduction seldom provides any value. In 2015, optimise your price perception in every step of the customer journey without sacrificing margins.

7. Better results of price increase campaigns
The realisation rate for price increases has come to an all-time low at 36%. A successful price increase campaign is configured on three levels: a differentiated strategy, strong preparation of the organisation and a rigorous roll out. In 2015, create your bullet proof approach to price increase campaigns.