Pricing, Profit & Revenue Optimization

Helping clients better understand and address pricing opportunities.

Double digit sales growth is rare in mature markets. As a result, cost-cutting has been a strong focus for many corporations to optimize revenue and deliver increased profitability. However, pricing is also a highly effective lever and an opportunity that many businesses have failed to fully access.

The use of technology – and through technology access to information – is giving customers ever greater clarity on specific price points, and empowers them to make informed comparisons and choices based on price; it also gives corporates the ability to take a more agile and data-driven approach to pricing optimization and management. The ‘big data’ phenomenon has led many companies to invest in their pricing capability. Those that have outperformed the market in terms of profit growth.

Capability Areas

The Teneo team has developed six key capability areas to help our clients understand and address this pricing optimization opportunity:

• Pricing Strategy: From a pricing perspective, how do we aspire to be perceived in the market?
• Price Setting: How do we differentiate our pricing in different segments and set appropriate target prices?
• Price Execution: How do we push price guidance to sales teams and ensure its value is realized?
• Price Realization: How do we achieve target pricing and maximize the power of discounting?
• Price Reporting: How do we report on our price performance and visualize the data?
• Pricing Organization: How do we ensure organizational accountability and focus across the pricing process?

Pricing Strategy

Most of our work on pricing strategies begins with a clear emphasis on customer segmentation. Our team has developed a strategic approach to identify different customer segments, understand the specific drivers of value in each, and develop differentiated pricing strategies to maximize that value. When combined with a clear understanding of the economics – especially the marginal cost and capacity – of providing goods and services, we are then able to combine these pricing strategies with broader quota management, and promotional and distribution approaches, to develop a holistic approach to profit and revenue optimization.

Our approach to customer segmentation and preference analytics is based on rigorous quantitative analysis of customer requirements and willingness to pay.

We have extensive in-house experience in using qualitative research, simple quantitative panel surveys and complex conjoint techniques to differentiate customer segments and derive price elasticities.