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Pricing Fitness Check: Realize untapped potential in pricing!

Intensifying competition, increasing market price transparency, professionalization in purchasing: Global, cross-industry trends are exerting increasing price pressure on companies. However, many companies are not developing their price management to the same extent – products are often significantly overpriced and far above market levels. Customers are looking for alternatives or have already gone elsewhere. To counteract the loss of market share, inappropriately high discounts are granted to sales partners and end customers, while sales and margins are gradually eroding.

A Pricing Fitness Check creates transparency as to whether the pricing in your company is still in line with the current state of the art: The status quo is analyzed in a short time. External benchmarks and best practices are examined and an individual report with recommendations for your company is created. The Pricing Fitness Check is conducted in three phases: Analysis, Potential Assessment and Implementation Planning.

Client testimonial by Zeppelin CFO for Homburg & Partner

1 | Analysis: Grasp status quo, identify pain points

The Pricing Fitness Check begins with a comprehensive analysis phase. Five qualitative and quantitative tools are used to establish a solid information base on the status quo in pricing:

  • Interviews with internal experts from various functional areas (e.g., price management, product management, sales, controlling, purchasing, service) to create transparency about current pricing structures and processes and discuss key pain points
  • Document screening (e.g., strategy documents, pricing waterfall, pricing logic, discount policy) to grasp existing processes, organization, and systems in pricing
  • Market price research (e.g., via price crawling, mystery shopping) in order to benchmark current price positioning with price points of comparable competitive products
  • Pricing DNA® to show the status quo using more than 120 key pricing dimensions (e.g., minimum order value, cash discount, pricing scales) with the target of creating transparency in current pricing and for external benchmarking against direct competitors and best practices in other industries
  • Quantitative analysis toolbox: Case-specific selection of appropriate analyses from our toolbox (e.g., hit rate analysis, price waterfall analysis) to reveal pain points in pricing

Analysis examples: Market Price Research, Pricing DNA, Toolbox

The pain points identified during the analysis are structured along previously defined pricing dimensions and presented in a detailed report. During the initiation phase of the project, it is determined which pricing dimensions will be addressed in the Fitness Check. Generally, it is recommended to use an approach that is as holistic as possible, covering not only strategic, organizational and process-related aspects of price management, but also systems and software used for this purpose.

Typical pain points detected during analysis:

Move the mouse over the four areas of the illustration to see details.
Pricing strategy Price controlling & monitoring Price determination Pricing processes & systems

2 | Potential assessment: Derive key levers, quantify benefits

The results of the pricing analysis are now compared with benchmarks from the same industry and with best practices from other industries. The current maturity level of the own company is shown in the pricing radar.

Price radar with exemplary results

Based on the identified pain points in pricing, a longlist of levers is created with which companies can successfully address their individual challenges. All levers are evaluated according to their sales and margin impact. An assessment of the implementation effort in terms of time and resources is also made. Impact and effort of each lever are shown at a glance by locating them in a 2×2 matrix.

2x2 matrix containing various pricing levers

A detailed business case is calculated for each pricing lever to implement most promising levers. The resulting sales and margin effects are differentiated according to whether they occur on a one-time or recurring basis. The internal implementation effort for the stakeholders involved is also shown for each lever.

3 | Implementation planning: Plan the realization of potentials, tackle quick wins.

For prioritized levers, also solution sketches are prepared, describing the respective goal of the change measure and outlining the recommended implementation path. Finally, the Pricing Fitness Check report contains an implementation roadmap for professionalization in pricing. It shows time durations for the implementation of the levers and points out dependencies between individual levers.

Quick wins are often identified during the Pricing Fitness Check and can be implemented with little effort within the project initiative. Unused pricing potential can thus be exploited in the short term. In this way, a Pricing Fitness Check amortizes after only a few weeks. The early measurable successes support internal acceptance of the initiative and provide tailwind for the subsequent implementation of larger strategic levers.

Porträt Daniel Lindner
Daniel Lindner, Partner:

“Hardly any other instrument has such a strong and measurable impact on sales and margins as excellent pricing. Often, levers that can be implemented quickly and easily already have an enormous impact on results. An independent and well-founded fitness check ensures that these levers are not left undiscovered and that pricing potential is maximized efficiently.”

Porträt Jens Behling
Jens Behling, Senior Consultant:

“In many companies, existing structures and methods in pricing are too rarely challenged despite constant market changes. An additional external perspective brings experience with current best practices to the evaluation of potentials in pricing and is free of conflicting interests. Often, the moment of surprise and the urge to act are great when we present the results of the Pricing Fitness Check to our clients.”

Companies that trust our Pricing Fitness Check:

You want to learn more? Nothing could be easier!

If you want to learn more about the Pricing Fitness Check or the realizable effects, you can leave a request via the contact form in a few seconds. Our partner Daniel Lindner will then contact you personally.

Porträtbild von Daniel Lindner
Partner

Daniel Lindner

daniel.lindner@homburg-partner.com
Tel.: +49 621 1582-134