strata community australia national convention presentation 2nd jun 2014
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Are You Pricing Like Dennis Denuto? My presentation to the Strata Community Australia National Convention, in Cairns, on Monday 2nd June 2014TRANSCRIPT
Slide 1
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
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Why Pricing is Getting Scary
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Number 10
Power to the Customer
The Marketer The Customer
Customers know more about marketers, than marketers know about customers
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Number 9
Comparisons are easy
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Number 8
Scan & Scram
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Number 7
Err at your peril
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Number 6
Automatic Refunds
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Number 5
Choices
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Number 4
Everyone’s going to know about this…
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Number 4
Even your Shareholders…
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Number 3
I’m not buying your time
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Number 2
Just give me your quote!
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Number 1
Beaten to a Pulp
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Warning: Audience Participation Imminent
Why is Pricing So Important?
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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 Uplift
Ø 10% Volume Uplift
Ø 5% Volume Uplift
Ø 8.2% of volumes
Ø 28.6% of volumes
Ø 38.7% of volumes
Quiz Time Decreasing & Increasing Prices
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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
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…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
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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?
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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”
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But What is “Pricing Power”?
“The ability of you to get the
price you deserve for
the value you provide”
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Are You Pricing Like Dennis Denuto?
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Number 10
Leaving Pricing too late in the Marketing Process
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Number 9
Top-down Pricing to fix the P&L
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Number 8
Using the Same Averages across all Products & Services
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Number 7
Cost-Plus Pricing
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Number 6
Too Narrow a Competitive Perspective
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Number 5
To the General Level of the Competition
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Number 4
Not Segmenting Customers
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Number 3
Mechanical
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Number 2
Not Challenging Competitors or the Industry
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Number 1
Not Changing Your Pricing Model
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Number 1
Someone Who Did Change her Pricing Model…
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10 Ways Your Can Improve Your Pricing
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Number 10
Develop a Pricing Strategy…
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Number 10
...that Includes a Discounting Policy
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Number 9
Don’t Condition the Market
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Number 8
Form a Pricing Committee
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Number 7
Don’t Talk About Costs…
…and remove invoice shock
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Number 6
Its Not About You
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Number 5
All Value Is Subjective
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Number 4
All Value Is Contextual
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Number 4
All Value Is Contextual
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Number 3
Segment the Market
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Price Buyers
Rela8on-‐ship Buyers
Value Buyers
Poker Players
Number 2
Understand Your Buyer
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Number 1
Remember Goldilocks…?
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Any
Questions?
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Jon Manning Founder & Director, Sans-Prix.com
Founder & Managing Director, PricingProphets.com
PO Box 533, Ascot Vale, Vic 3032 Australia
youtube.com/user/PricingProphets
linkedin.com/company/Pricing-Prophets
+61 (0) 405 629-141
@SansPrix | @PricingProphets facebook.com/PricingProphets
http://www.SansPrix.BlogSpot.com
SlideShare.net/SansPrix
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