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Smart Pricing

Increase your sales and profits with strategic pricing

Your expert

Matthias Riveiro

Matthias Riveiro
Partner, Customer Practice at PwC Germany
Tel: +49 69 9585-7919
Email

Achieve price targets, drive growth, increase revenue

Professional pricing strategies offer companies enormous potential. Not only do they help drive growth, but they also increase revenues. We evidence this with over 2,000 successful projects already implemented by PwC's global pricing team.

With our proven end-to-end approach, we help companies achieve their pricing targets and increase their EBITDA sustainably – by an average of two to eight per cent. How does this work? From supporting you with a pricing strategy through operational price management to technical and organisational implementation.

Where is your company today in terms of pricing? Where do you want to go from here? In our experience, such questions require industry and company-specific answers. Not least because pricing maturity and pricing competence vary greatly, and the various pricing goals can be achieved in very different ways.

Would you like to find out which strategy best suits your company? Contact us. We look forward to exchanging ideas with you.

Our smart pricing services

Holistic pricing expertise

Our smart pricing approach encompasses the management of your entire pricing waterfall. It enables us to consider and map complex processes – and include the relevant focal points, which differ significantly depending on your industry, business model and IT system.

Our pricing services span:

  • Price lists and architectures
  • Discount, bonus, and condition systems
  • Professional service and logistics pricing
  • Automatic and dynamic calculations
  • CPQ systems
  • Sales training
  • Transparent controlling

Schematic price waterfall

Infographic about Customer Centric Transformation by PwC Germany

Pricing diagnosis: increase profitability

Pricing calculation schemes and systems have the greatest influence on profitability – for example, when it comes to high, supposedly standard market discounts. In practice, many companies are unaware of the untapped price potential.

Using our data-driven approach, we work with you to identify the hidden potential in your pricing policy. Along the price waterfall, we diagnose and evaluate where pricing is inconsistent and derive measures that have the greatest positive effect on your profit.

Start your profitability offensive with us and optimise your pricing.

Infographic about Customer Centric Transformation by PwC Germany

Value-based pricing: using pricing models efficiently

Why do many companies fail to achieve the optimal prices for their products and services? One main reason is price lists – their architectures and structures are often based on outdated and inappropriate parameters. For example, over time, they ignore changes in customers' willingness to pay more or internal cost developments. If companies do not consider such influences sufficiently (or too late) in their price architecture and list, significant profit potential remains untapped.

PwC supports you in developing a value-oriented pricing strategy. This way, you increase sales through differentiated price increases without strongly influencing volume. And with our help, you can implement these measures in your IT system, a configurator, or both.

Our approach to value-based pricing

At first glance, different pricing models can seem complicated, which is why PwC supports your company in evaluating and applying the basics of value-based pricing.

We proceed systematically in several steps, in collaboration with you:

  • Identify inconsistencies and weaknesses in your current pricing structure.
  • Develop a new, systematic pricing concept based on various internal and external value factors. These include defining modern calculation mechanisms and formulas based on individual willingness to pay and price-relevant functions and options (for example, in SAP MM).
  • Define new master and gross prices at item and option level.
  • Implement the results in your ERP system – whether it's individual adjustments or completely new price architectures.

It pays off: our price architecture kit gives you fast and measurable results, typically in the range of one to three EBITDA percentage points. And in subsequent years, price adjustments are made almost automatically thanks to the new system.

Infographic about Customer Centric Transformation by PwC Germany

Dynamic pricing: automatically adjust to the best price

Many companies manage their prices in Excel spreadsheets and re-enter them manually in their ERP system. This is time-consuming, error-prone, and inflexible – especially with changing price dynamics. More and more companies want to adjust their prices several times a day (for example, in online retail) or monthly (for example, in mechanical engineering). Adjustment criteria include: 

  • Customer profiles
  • Inventory levels
  • Production utilisation rates
  • Cost trends
  • Fluctuations in demand
  • Weather data

However, it is often unclear how dynamic pricing works because individual, short-term and automated adjustments are based on complex algorithms. Our study shows that dynamic pricing can increase sales and margin potential by an average of 3.9 per cent.

Can your company benefit from dynamic pricing? To find out, PwC first determines whether it is a fundamental fit for your company. If so, we will find the right approach for you. We ensure that your sales staff understand the accelerated and automated calculations – and explain them to customers in a comprehensible way. We can also programme the algorithms or implement new pricing systems for retail companies if required.

Infographic about Customer Centric Transformation by PwC Germany
Infographic about Customer Centric Transformation by PwC Germany

Customer conditions: performance-based discounts, bonus, and condition systems

Discounts are an essential part of companies' sales strategies. However, they often lack transparency and control over discounts: some companies grant discounts of up to 80 per cent or guarantee bonuses of up to 30 per cent. Unsystematic discount fluctuations of 30 per cent for comparable customers are not uncommon in our experience.

Out of habit, even small and unprofitable customers receive high discounts – even though the hoped-for benefits fail to materialise. Analytically validated and strategically differentiated bases for decision-making are rare. Consequently, many companies lack performance-oriented discounts, bonuses, and condition systems.

PwC gives you complete transparency on your discount, bonus, and condition practices. We put discount and bonus programmes and special pricing to the test and work with you to develop tailored, fair pricing systems with systematic rules and regulations. Our focus is on customer value and pricing strategy. As well as providing you with the discount rules on paper, we implement them in your systems.

We accompany you through all development stages, from concept to the specifications to the programming in your CPQ software (such as SAP SD or Salesforce). And so that you can implement the new strategies effectively, we involve your IT team right from the start. 

Infographic about Customer Centric Transformation by PwC Germany

Service and logistics pricing: pricing and communicating value-added services profitably

Smart pricing is the only way to monetise the value of your services. Most companies offer a wide range of value-added services, for example:

  • Specific delivery terms
  • Consulting services
  • Guarantees

The problem: communicating and monetising these services is often less than ideal. Customers are unaware of the value-added services available, so there is no willingness to pay.

Use your value-added services to build customer loyalty and generate revenue and profit. We support you in identifying appropriate services, evaluating potential monetisation, and developing suitable pricing models. Even services where there is (currently) no willingness to pay can be used profitably and monetised.

Our approach does not end with the pricing concept. Together with your sales teams, we also improve communicating value and overcoming objections. After all, these are crucial for success in service and logistics pricing.

Infographic about Customer Centric Transformation by PwC Germany

Pricing analytics and governance: implementing sustainable pricing concepts

Pricing is not a one-time task. Companies must negotiate pricing elements regularly, adapt pricing processes, and implement appropriate measures to succeed.

Sustainable monitoring and governance are required to implement pricing concepts efficiently. The advantage is that pricing is a number-driven topic, so companies can effectively control it with pricing analytics and management.

In cooperation with your sales and marketing as well as your finance and controlling department, we support you in the following tasks:

  • Identifying the right key performance indicators for your pricing management
  • Developing meaningful reports and cockpits
  • Defining results-oriented processes and responsibilities

We also offer pricing analytics, whether we use your existing business intelligence solution or implement your pricing software or not.

Infographic about Customer Centric Transformation by PwC Germany

“It makes sense for companies to closely analyse their willingness to pay for their products and services, as well as their margins. Based on the market, sales and behavioural data, all companies can identify opportunities to gain significant margin potential through automation and dynamic pricing.”

Matthias Riveiro,Partner, Customer Practice at PwC Germany

Our case studies

Value-based software pricing for autonomous driving for a well-known automotive supplier

Challenge

Our client wanted to price the value of its autonomous driving software solution, even though this market did not yet exist. They commissioned us to conduct a comprehensive study to determine the price and derive a roadmap.

Our approach

  • An extensive study, including interviews with industry experts (> 30) to determine value drivers
  • Cross-industry benchmarking of software and licensing models
  • A customer end study using direct and indirect pricing methods
  • Simulation and evaluation of the collected results
  • Derive an optimised OEM offering consisting of hardware, software, and services, including defining the optimal price ranges
  • An evaluation of further challenges (e.g., buying centre OEM) and derivation of a communication roadmap and value argumentation

Added value

  • Changing the customer mindset from a cost-plus way of thinking to value-based pricing
  • Building a deep market understanding and defining a coherent and value-based monetisation model
  • Deriving value communications and a communication roadmap

Pricing governance for an international building materials distributor

Challenge

Our client wanted to know precisely which prices were market standard and what they could achieve in every scenario. We supported them in dynamically calculating ideal and minimum prices for customer-specific negotiations and ensuring compliance through appropriate governance.

Our approach

  • Advising on the design and implementation of dynamically calculated ideal and minimum prices, considering customer-specific and regional factors
  • Identifying open compliance needs in current processes and organisations – with the participation of central as well as decentralised stakeholders in all 100 subsidiaries
  • Jointly developing pricing and approval processes and reporting structures
  • Defining release and escalation limits for critical and essential offers
  • Designing and implementing pricing and approval tools and reporting dashboards considering technical possibilities

Added value

  • Consistent pricing, considering customer, order specific, and   regional factors
  • Increased price enforcement through IT support of sales staff
  • Uniform and controllable pricing in all trading branches
  • Reduced number of manual approval processes with a simultaneous increase in approval quality

Value-oriented product pricing for an electronics manufacturer’s global sales markets

Challenge

Our customer was facing a highly complex and extensive product portfolio with regular product launches. Pricing was done mainly on a cost-plus basis with no consistent integration of value drivers. There was a lack of comprehensive control in price execution and no clear strategy on how to translate value for customers. We helped the client define a clear portfolio pricing strategy for multiple sales markets.

Our approach

  • Defining product categories and associated anchor products
  • Conducting price/performance positioning and competitor benchmarking
  • Identifying value drivers and weighting of relevance
  • Establishing a systematic list price architecture and introducing strategic adjustments in different sales markets
  • Developing a prototype system to map and implement the new architecture

Added value

  • Identification of inconsistencies and weaknesses in the current pricing structure
  • Development of a standardised and transparent pricing logic based on value-based parameters to determine new list prices
  • Pricing logic for new product launches and reduced number of manually defined list prices
  • Uniform and consistent pricing for international sales markets

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Contact us

Matthias Riveiro

Matthias Riveiro

Partner, Customer Practice, PwC Germany

Tel: +49 69 9585-7919

Tobias Müller

Tobias Müller

Director, PwC Germany

Niklas Dilger

Niklas Dilger

Senior Manager, PwC Germany

Tel: +49 89 5790-5170

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