Change Price

MVM RoadMap Thought Process

1. first consider price in zone 1: how do we price our products today? Is it based on the costs or the marker? What is our pricing trend line? How have customers responded when prices have changed?

2. Next look at zone 5: consider how competitors are pricing, how our prices compare in the industry overall, and if our suppliers actions are affecting our pricing?

3. Then think about pricing in zone 2: how should we change our price going forward and what will this do the volume we sell

4. lastly look at zone 3: organization - measuring change is important → what will we do to track prices moving forward?

Plan out on paper

Pricing - how do we price to our advantage

Internal - price basis

• are we using a cost plus system?

• Does the market demand a price?

• how often do we review this approach?

External review

• pressure from competitors

• Industry overall - how is it trending?

• have input supplier costs forced us to raise prices?

Measurement

• what is market response to new pricing

• how do we measure the impact on volume

Presentation example

To set prices at a level that is both competitive and advantageous to our client, we will need to review both internal practices and external forces. Internally, I would like ot understand our pricing basis, either cost or market driven, and how it has changed over time. Externally, I want to explore the market pressure from competitors, the industry and suppliers that may be affect our prices. With these facts in place, we can determine how to set and measure them going forward. Could we start with the pricing that has been done to date? Do you have any data or background information I could review?

MECE Mode

Revenue assessment

• review price within revenue equation (R=price times volume) to best understand to what degree prices can impact revenue

• tie all price discussion back to impact on revenue and how price change is linked to volume?

Cost assessment

• review variable cost decrease to see if price may be lowered with little resulting profit loss.

Hypothesis examples

we can raise price and gain the full value of the price increase

there is no price elasticity in our industry meaning a price raise would cause volume to drop

our current pricing strategy is inappropriate as our product is perceived as premium

Mining for an answer

Prices to low

• when was the last time we performed a price increase?

• how have competitors been pricing? Have we missed an increase? How much lower are we compared to competitors?

Prices too high

• What happened to sales volume when we raised prices?

• What evidence do we have that competitors experiences the same?

Customer response

• how have customers reacted in the past to price reductions and increaes?

• Is there evidence that they will respond the same moving forward?

Variable Costs

• how can our pricing changes be assisted with reductions in costs

• can we hold off on any price changes by reducing costs?

Pricing Mechanics

• how will we roll out the new pricing? What will our sales people say for business sales? For retail sales, how will we advertise the change?

end the case

answer yes or no but give a range if yes as to how much