Pricing Challenges in High-tech Manufacturing
In a continuously changing competitive environment, figuring out
the ‘right’ price is one of the most complicated decisions
companies can make. High-tech manufacturers face particularly
complex pricing environments due to a number of challenges. Short
product lifecycles require dynamic price management and an understanding
of the overall product portfolio. Particularly during product
launch, setting the opening price is a critical decision that will
cause profit ramifications throughout the life of that product
and related offerings.
Additionally, a complex array of distribution channels can lead
to difficulty in managing supply through the channels, segmenting
prices appropriately, and capturing end customer data. Manufacturers
must support a lengthy array of discounts, price supports, rebates
and various contract terms, which leads to numerous price waterfall
elements where revenue leakage occurs.
Too often, the problem isn’t too little data, but rather
too much data and not enough insight. High-tech manufacturers
often fail to capture the opportunity to segment customer and channel
pricing for greater profitability because they can’t leverage
their data effectively or manage the complexity.
Experts unanimously concede that Pricing is the most
powerful lever companies have to affect profits. Marn, Roegner,
and Zawada, in their revolutionary book, The Price Advantage,
assert: “Failure to take real initiative in pricing
today virtually assures that percentage points of price will
slip through your hands annually—and that huge chunks of
operating profit will drop off your bottom line.” In
high-tech manufacturing, pricing excellence has become a competitive
imperative as the industry attacks a broad range of pricing challenges:
- Multiple channels and segments: Too many pricing
possibilities to keep track of manually; simply can’t sort through pricing
alternatives or scientifically evaluate the customer buying behavior
and segment attributes that lead to optimal pricing without a
system. Channels may keep the manufacturer at arms-length
from the end customer, further muddying data.
- Managing the lifecycle: Short product lifecycles
require dynamic price management, with adjustments based
on market conditions. Setting
the initial price is key to ongoing product profitability.
- Negotiation tools: Sales people don’t
have adequate tools to negotiate confidently with customers.
- Manual limitations: Too much effort and time
to update prices, exacerbated by the difficulty on calculating
impact on existing customers and contracts.
- Complex terms and pricing conditions: Multiple
sources of revenue leakage between the price and the bottom line. Difficulty
tracking customer compliance to contract terms.
- Pricing process: Pricing decisions made based
on “gut feel” rather than consideration of relevant
data
- Win-Loss tracking: Lack robust ability to
systematically track wins and losses and incorporate feedback
into pricing decisions.
These challenges commonly lead to opportunities to dramatically
enhance business results by addressing them with proven processes,
tools, and pricing science. PROS is a leading provider of
high-value solutions that specifically address these challenges.
PROS Pricing Solutions for High-tech Manufacturers
Simplify, accelerate and improve your decision-making: PROS
Pricing Solutions Suite helps high-tech manufacturers take advantage
of price improvement opportunities by providing insight into price
performance, enabling strategic pricing decisions at the segment
level, streamlining and automating workflow and enhancing customer
negotiations by directing key benchmarks, guidelines and decision
support to the field. PROS’ pricing software provides
the visibility required to identify and act on opportunity areas
and catalyzes pricing discipline and consistency in execution.
PROS’ comprehensive suite includes Analytics, Execution,
and Optimization. Key value drivers include the following:
With PROS Pricing
Analytics tools, decision makers
can:
- Identify and correct destructive pricing trends
- Locate and correct poorly performing customers and
segments
- Drill down to identify root causes of poor
pricing performance
- Evaluate and quantify pricing improvement opportunities
- Understand demand behavior across segments
- Monitor market dynamics and pricing performance
to enable faster response to problems and opportunities
With PROS Pricing
Execution tools, decision makers
can:
- Segment prices and execute them quick in the
marketplace
- Provide field decision support tools that
increases sales’ confidence in system prices, empowering
them to negotiate the best price and terms
- Eliminate manual pricing errors by ensuring
that prices are communicated to ERP systems and rebates are applied
correctly
- Realize more from a price increase by establishing guidelines (realistic
floors and targets) based on defined pricing strategies
- Prevent unnecessary profit leakage through consistent application
of pricing strategy
- Create and execute business rules to consistently
enforce contract terms
With PROS Pricing
Optimization tools, decision
makers can:
- Optimize price points based on best available
inputs, including forecasts, business rules, customer price sensitivity
and constraints
- Use advanced analytics to guide better pricing decisions, considering price-demand
relationships, including zones of indifference
- Use price-testing to capture price elasticities
across business segments
- Minimize pricing mistakes by evaluating what-if scenarios
- Automate price optimization routines for massive
data sets
Proven Results
Price management is one of your most powerful weapons to win customers,
define your product value, capture more revenue, and maximize profitability. Leading
analysts say that falling behind in price management advances could
be costing your company 10-50% of your profits. PROS Pricing
Solutions has a 21-year track record of working with Fortune 1000
companies across 10 industries to increase their profitability.
By eliminating profit leaks, uncovering hidden price improvement
opportunities, providing sales people with better negotiation tools,
and optimizing prices across segments, PROS customers have been
able to leverage the power of pricing.
To learn more about
the opportunities to achieve Pricing Excellence, please
contact info@prospricing.com or
call our sales team at +1 713-335-5277.
Industrial
Manufacturing | Chemicals | Petroleum | High-tech
Manufacturing |
