Pricing Diagnostic Approach – How We Review Your Pricing Process

The Pricing Diagnostic is typically the beginning of our pricing management work with a new client. It serves several important purposes:

  • Assess all relevant aspects of the current pricing processes
  • Gain alignment internally as to the opportunities for improvement that exist
  • Separate the ”low-hanging-fruit” opportunities from those that are more difficult to capture
  • Quantify the financial opportunity for making pricing improvements.
  • Establish a vision and the steps for achieving best-in-class pricing management process.

Approach

 The typical Pricing Diagnostic comprises three steps.

1.  Interviews with key decision-makers and influencers on pricing
 The purpose of these interviews is to follow each of the pricing processes to determine:

  • The required inputs and outputs for pricing analysis vs. what is being provided
  • Value added at each step
  • What decisions are being made at each step
  • What tools are available to support the decisions
  • If applicable, how the results of these decisions are analyzed
  • How much time is being taken (if we believe there is a bottleneck)
  • What processes are missing to connect strategy and operations

 

2.   Analysis of interview data
 Upon completion of the interviews, Pricing Solutions consolidates the data that has been gathered and summarizes it in a meaningful manner. The interview notes are compared for consistency, and each pricing process is rated.

 There are typically some follow-up telephone conversations with the project team to gain clarification on specific issues that have been identified and to ensure that the wisdom of the client team is fully leveraged.

 

3. Report writing
 The final report summarizes the findings of the team. It is written in PowerPoint and includes the following:

  • Review of the client’s tools/analytics
  • Assessment of process gaps against world-class benchmarks
  • Assessment of pricing infrastructure
  • Pricing Solutions’ Stoplight chart, including the client’s current level on the World Class Pricing hierarchy
  • Pricing Solutions’ Roadmap for moving forward
  • Estimate of benefits to be realized by improving pricing

 

4. Final presentation
The final presentation is conducted at the client’s office. The results are presented and discussed in-depth. The goal is to agree to a common picture of the roadmap for pricing improvement.

There should not be many surprises at this point, as there will have been a high level of contact between Pricing Solutions and the client project team throughout the process. This ensures that there is a high degree of buy-in and no unpleasant surprises at the end of the project.

Items that are typically not included in a Pricing Diagnostic:

  • Original analytics (analysis of raw data)
  • Provision of new pricing tools (e.g., price optimization model)
  • Answers to specific pricing questions (e.g., what is the optimal price for a product?)