Forklifts are low margin products between 5.0%-15% for new units. In this case example the discovery of pricing power in a 7 Tonne capacity forklift is discussed. This discovery had major implication for the pricing strategy for the company and ultimately generated an extra $3.0M in profit on revenues of $100M. The key lesson here is for you to discover your 7 Tonne Forklift” pricing power. Pricing power is often not where you initially think it would be.

1. Copyright Pricing Insight 2014 1
PRICING POWER CAN BE FOUND THROUGH DETAILED ANALYSIS OF EACH INDIVIDUAL PRODUCT
HOW TO IDENTIFY THE HIDDEN PRICING POWER IN YOUR PRODUCT PORTFOLIO

2. Copyright Pricing Insight 2014
Case example: Materials Handling Forklift Equipment
Each truck in materials handling is application specific. Both for how much they can lift, and what goods they lift in specific environments.
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The products shown here have margins that range from < 10% up to 40% for selected pieces of equipment. Detailed value analysis by product, market segment and customer is needed to optimise profitability.
Many capital equipment companies use cost plus mark up methods to set pricing. This method severely limits revenue and margin opportunities for new units and aftermarket parts profitability.
We discovered that the 7 Tonne forklift had the highest margins and highest sell prices in the market fir the Hysterbrand. The reason? Brand equity with the Timber and Coal industries and a belief that the product would not fail in harsh conditions i.e. Value at Risk.
Pricing Insight was able to generate $3.0M EBIT in 12 months for Hysteron $100M of addressable revenues. Units volumes remained identical to previous years
The 7 tonne forklift has greater margin and pricing power than any other forklift in the range

3. Immediate Revenue & Margin
Market does not have perfect knowledge
Customers have higher need state for speciality items –unrelated to the elasticity of everyday high volume items
Long tail items often a monopoly range –limited to zero practical competitors
Long Tail Price Optimisation
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HEAD –30%
MIDDLE –50%
TAIL –20%
Long tail SKU optimisation is ideal for business with + 500 individual product and at least 100 customers.

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KEY POINTS
The last 20% of revenues in your business can be the source of up to 50% of all incremental margin gains.
Optimising the last 20% of revenues offers the lowest risk profile with substantial profit potential upside.
What does the last 20-30% of revenues look like in your business?
How many products or services do these revenues represent?
What would a 5-9%points of margin improvement mean to the last 20% of revenues in your business? For a $200M business this equates to $2.0-3.8M in incremental EBIT.
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5. Copyright Pricing Insight 2014
ABOUT PRICING INSIGHT
Pricing Insight
VALUE PROPOSITION
We help companies accelerate revenue and margin expansion
[Track record: $2.7M-$7.0M per project]
CLIENTS
Fortune 500, ASX 500, PE Portfolio companies
REVENUES UNDER ADVICE
$1.1B
Total lifetime: $5.0B
EXECUTIVES TRAINED
2,300
FOUNDED
2007
FOUNDER
RON WOOD
CASH GENERATED
Approx. $150M
Average yield 3.0%
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CONTACT DETAILS
We work with a wide range of product and service related industries to generate earnings growth
Corporate Office: Level 26, #1 Bligh Street Sydney 2000P: + 61 2 8226 8621E: prospectus@pricinginsight.com.auW: www.pricinginsight.com.au
Rank Group Limited
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