2. Slide 2
Are You Pricing Like
Dennis Denuto?
Why Pricing Is Getting Scary?
Why Is Pricing So Important?
Are You pricing Like Dennis Denuto?
10 Ways To Improve your Pricing
16. Slide 16
You offer a service with a 30% margin, and you are planning on reducing
prices by 5%. What sort of volume uplift is required
to
maintain
exis+ng
revenue?
You have a service with a 20% margin, and you are planning on increasing
prices by 8%. What sort of volume are you pu2ng
at
risk?
Ø 20% Volume UpliftØ 10% Volume UpliftØ 5% Volume Uplift
Ø 8.2% of volumes Ø 28.6% of volumes Ø 38.7% of volumes
Quiz Time
Decreasing & Increasing Prices
17. Slide 17
Why is Pricing so Important?
Impact on Operating Profit of a 1% improvement in…
2.3%
3.3%
7.8%
11.1%
Fixed Costs Volume Variable Costs Price
18. Slide 18
…Regardless of the Industry
Impact on Operating Profit of a 1% improvement in Price
22.0%
13.5%
12.7%
12.3%
11.4%
11.1%
10.4%
10.1%
9.8%
9.3%
8.6%
6.8%
6.1%
3.0%
1.8%
Automotive
Transportation
Metals & Mining
Chemicals
High Tech &
Electronics
Aurospace & Defense
Paper
Insurance
Healthcare
Oil & Gas
Communications
Consumer Products
Pharmaceuticals
Banking
Investment
Impact of a 1% Price Improvement on Operating Profit
For The Kroger Retail Food
Chain…
► If prices were increased 1%...?
For Coca Cola…
► If prices were reduced 1%...?
For Continental Airlines
► 44mill passengers x Average fare
of $193 = Loss
19. Slide 19
50.0%
40.0%
32.0%
28.0%
26.0%
18.0%
8.0%
2.0%
Packard Other Compaq HP IBM Gateway Dell Apple
Source: Docters, R et al (2004) Winning the Profit Game: Smarter Branding, Smarter Pricing, McGraw-Hill, p40
The Importance of Price
As the Primary Selection Criteria, by brand – PC Industry
Who’s a Fan…
Of this Brand?
20. Slide 20
Words of Pricing Wisdom
“…if you have to have a
prayer session before
raising…prices…then
you’ve got a terrible
business”
“Price is what you pay…
value is what you get”
“The single most important
decision in evaluating a
business is pricing power”
21. Slide 21
But What is “Pricing Power”?
“The ability of
you to get the
price you
deserve for
the value you
provide”