Profits jump when CEO’s take an active role in pricing

Pricing power drives higher profits when C-level executives take an active leadership role in pricing and put a pricing organization in place, a worldwide study by Simon-Kucher & Partners reveals.
Strong C-level commitment to pricing – combined with a dedicated pricing organization – is essential to protect and boost profits in today’s low-growth economic climate. That is the key insight from Simon-Kucher & Partners’ Global Pricing Study 2012, an in-depth survey of over 2,700 executives and managers from over 50 countries.

“Staying in a pricing ‘comfort zone’ is no longer an option for C-level executives in the current economic climate,” said Georg Tacke, CEO of Simon-Kucher & Partners, the world’s leading pricing consulting firm.

“Over 80% of companies face intense pricing pressure from competitors and customers, on top of the risk of inflation from volatile commodity prices,” Tacke said. “This underscores the urgency for C-level executives to get involved now.”
Companies whose C-level executives take an active role in pricing are 35% more likely to have high pricing power, and 30% more likely to expect strong EBITDA growth over the next three years, the study showed. Pricing power is the ability of a company to get the prices it deserves for the value it delivers to customers.

“Pricing power begins at the top of the organization,” Tacke said. “When C-level executives turn their attention to pricing, their companies are more likely to have a stronger profit outlook, more likely to raise prices, and more likely to make those price increases stick.”

C-level involvement in pricing means setting the right objectives and incentives, driving the organizational and cultural changes to support better pricing, and taking more responsibility for pricing strategy as a whole. “It's a leadership obligation for the executives, not a day-to-day operational one,” Tacke said.

Companies with active C-level involvement in pricing are 18% more likely to put through a successful price increase, according to the study. But more importantly, they are 26% more likely to get higher margins from their price increases than companies without C-level involvement in pricing.

“Every point of margin you can get from a price increase is precious in today’s tough climate,” said Matt Johnson, the managing director of Simon-Kucher’s San Francisco office. “That’s why the executives not only need to put more of their own time and energy into pricing, but also equip their companies to do the same.”

That means creating a dedicated pricing organization. The study showed that such organizations also have a clear impact on a company’s ability to translate pricing power into higher profits.

“Don’t underestimate the importance of creating a strong pricing organization,” Johnson warned. “Creating and exercising pricing power used to be luxury for some companies. Now it has become an essential survival skill. You need end-to-end coordination, from strategy to analytics to interpretation and implementation.”

Companies with dedicated pricing organizations are 15% more likely to increase prices than companies which lack one. They also pass on 11% more of their planned price increases than companies without a pricing organization.

But Tacke and Johnson point out that the greater emphasis on pricing and the accompanying organizational changes are not merely survival mechanisms.

“You shouldn’t retreat back into your pricing ‘comfort zones’ when economic growth returns to historical levels,” Tacke urged C-level executives. “The attention you pay right now and the organizational changes you make will reward you even more when growth picks up.”

About the Global Pricing Study 2012
The Global Pricing Study 2012 included 2,700 high-level decision makers from companies in all major service and manufacturing industries across Europe, the Americas, and Asia. The survey covered pricing organization, pricing power, inflation management, profit orientation, and profit outlook. Simon-Kucher & Partners conducted the study in collaboration with the Professional Pricing Society (USA) and the IE Business School (Spain).

Study authors
Dr. Georg Tacke is the CEO of Simon-Kucher & Partners.
Matt Johnson is the managing director of Simon-Kucher’s San Francisco office.

Read the original article here: Simon-Kucher & Partners website


Welcoming New EPP expert and technology partner : Eucon

On the 1st January, 2013, Eucon became an expert and technology partner of the European Pricing Platform (EPP).

The European Pricing Platform (EPP) with its headquarters in Belgium was initiated in 2004 and has since developed to become the leading European knowledge base for optimising prices and profits for decision-makers, pricing managers and company directors. The aim of the platform is to develop and share pricing expertise and best practice scenarios. The EPP provides support for professional training for persons and companies involved in the optimisation of prices and profits.

The ever higher competitive pressure in the field of automotive aftersales, the number of variations and complexity of products has led to a growing demand for pricing expertise. Eucon is a leading lifecycle manager and pricing specialist for automotive replacement parts. The company has its own pricing management tool and comprehensive expert knowledge on how car and parts manufacturers can achieve a competitive advantage with product management and pricing.

The Eucon Pricing Manager (EPM) is the first strategy-based price optimization solution designed specifically for the field of automotive aftersales. This highly specialized pricing management tool enables the systematic development of price strategies and the optimization of sensitive pricing processes in the lifecycle of a replacement part.

EPM combines reliable and accurate data from our PartsPool® product information system with rule sets for professional pricing management and business intelligence gained from market analysis. With more than 60 million data sets, PartsPool® is a unique and industry leading source for comprehensive product and price information.

EPM enables car and parts manufacturers to permanently optimize prices throughout the parts' lifecycle. Clients are able to systematically develop pricing strategies and optimize pricing processes by automatically pricing the majority of their replacement parts.

read the original article here : http://www.eucon.de/automotive/en/News#76


News announcement from the European Pricing Platform

Brussels, London, January, 2013

Pricing capabilities AND maturity seen as key competitive advantage for High Tech in 2013!

  • Pricing Capabilities and maturity are essential to securing additional revenue and margins in a challenging market;
  • With market forecasts down organizations must become more react and proactively protect margins;
  • C level decision makers must tackle pricing as a strategic initiative to harvest full benefits.
2013 is set to be a difficult year for high tech companies, IHS-isuppli recently adjusted their forecasts downwards by as much as 2.3%; Semi-conductors market was identified as most affected. (IHS Downgrades 2012 Semiconductor Forecast to 2.3 Percent Decline: Five out of six major application markets for semiconductors will shrink this year; December 6, 2012 DALE FORD)

The global recession that followed the financial crisis of 2009, and the weak recovery that is now underway, has brought home the need for new business models, more sophisticated channel revenue management and organizational shifts to maximize a successful response to market conditions.
Organizations are facing pressures on margins and profitability and therefore in turn questions as to the validity of their pricing strategies. 2013 will require them to look for better approaches, skills and technologies:  In a recent global study from Ernst & Young on risks and opportunities, pricing pressures have climbed from fifteenth risk in 2011 to fourth position in 2012. (Five is considered below the risk radar)

Cost cutting and national austerity programs seem to be compounding the slow recovery process and despite the impact of poor pricing strategies and / or execution being well understood, and felt throughout the organization, the discipline remain dealt with mostly at an operational level.

If pricing and profit optimization are a concern for you and if you are looking for better ways to add value to your organization and directly impact profitability - register http://goo.gl/uT9Y9

EPP, a ‘not-for-profit’ knowledge exchange place focused to support business management, pricing and profit optimization professionals and CxO-level executives in Europe over a variety of industries and Model N, leader in industry specific solutions for pricing and profitability optimization trusted by ST Microelectronics, NXP Semiconductors, Nokia, Dell, FCI, Micron, Avago Technology, Texas Instruments and many others are this year holding their 2nd annual forum bringing together experts and decision makers from all over Europe looking to share know-how and also find tangible best practices to take back into their respective companies.

The 2nd Annual Pricing and Profit Optimization Forum on High Tech:
 4th – to the 6th of February 2013 at the Schloss Bensberg 5*, Cologne, Germany.

This forum will bring industrial leaders and innovators together to discuss the latest issues and developments in the pricing and profit optimization area. Strategic pricing decisions have never been more important for many organizations. We want to bring participants insights and possible answers to the pricing challenges facing many today. With an interactive format combining real-life case studies, informal debates and practical workshops, participants will gain the inside knowledge and industry insights in order to benchmark their pricing and profit optimization strategies, maintain critical competitive advantage and ensure maximum value.
“Pricing is a powerful and proven strategy for improving top-line growth and profitability, yet few organizations know how to do pricing well,” said European Pricing Platform president Pol Vanaerde.

“The economy is recovering but challenges remain in terms of the speed in which this is happening as well as some of the new buying and trading behaviors and expectations the crisis has brought with it.  As such pricing and selecting the right strategies as well as ensuing accuracy, flexibility and loyalty across the entire value chain remain the secrets  that unlock  profitability, market share and business agility,” said Model N Europe General Manager Niels Skov. “Our Partnership with EPP’s in holding this industry specific forum is testimony of both the level of interest we are finding as well as the growth of the “pricing movement”; the event will provide delegates with many success stories that uncover its strategic value.”

The EPP and Model N pricing forum for High Tech executives is the only of its kind: focusing on strategy, planning and execution with speakers from Telefónica, Barco, FCI, Cypress Semiconductors, Hewlett-Packard, and many more.

Unlock real bottom line value and exceptional growth and profitability with your pricing and profit optimization strategy.

Practical information

Event name: The 2nd Annual European Pricing and Profit Optimization Forum on High Tech
Venue : Schloss Bensberg 5*, Cologne, Germany

Date : 5 – 6 February, 2013 (4th of February complimentary pre-event by Model N)
Rate : € 1.395,00 for full forum attendance, second person can register for € 1.225,50. Bulk rates for groups are also available on demand.

Language : English
Further information or registration: Britt Dejager:  +32 (0) 51 320 372 // britt.dejager@pricingplatform.eu

Website for information :

Press pass : You are welcome to attend and find out more on the  pricing challenges for the High Tech industry in 2013, where top-organizations are exceptionally sharing their business-cases in order to improve profitability.   In return to the free ticket we expect a post event press release.
Become official blogger: European Pricing Platform offers the limited number of 4 Event Blogger tickets for the event. Bloggers are selected based on: blog content, readership, language and influence.