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© een Consulting GmbH 2
Ian Tidswell Biography
Founder of een Consulting, focused on helping B2B companies develop best-in-class end-to-end sustainable pricing processes
Professional Experience
• Since 2016, Independent Professional, Switzerland
• 4 years, Global Head of Pricing, Syngenta, Switzerland
• 2 years, Pricing Transformation Lead, Medtronic, Switzerland
• 6 years Partner, Head of Business Consulting, Vendavo Consulting, UK and USA
• 4 years, Director, i2 Technologies, USA
• 4 years, to Engagement Manager, McKinsey & Company, USA
Selected Experiences
• Developed a pricing framework & process for pricing innovations for out-licensing for leading diversified industrial company
• Built the HQ global pricing team for Syngenta. Indirect management of in-country pricing managers
• Lead multiple in-country projects for Syngenta to diagnose pricing opportunities and actions to address price setting, commercial terms management & price execution challenges
• Lead development of a global commercial terms/policy framework and playbook to align CT/P with strategic goals in each country within Syngenta, improved CT/P performance and enabled automation
• Headed the strategic initiative to substantially improve, harmonize and automate Medtronic International’s pricing processes across all major markets. Drove improved pricing & risk exposure
• At Vendavo successfully led discovery, design and deployment of Vendavo price system at multiple customers including chemicals, distributor, semiconductor, tire and mobile phone manufacturers
• Frequent speaker at global pricing conferences
Education
• Ph.D. Physics, Harvard University, Cambridge, Massachusetts, USA• B.Sc. in Physics, Imperial College, London University, UK
At a glance
• Former McKinsey senior consultant with line management experience in MedTech and agri-chemicals business
• Proven B2B Pricing transformation leader
• Practical, hands-on approach with track record in value delivery
• Based in Basel Switzerland
• LinkedIn Profile
• Email: ian@eenconsulting.com
© een Consulting GmbH 3
Introduction
• A previous slide deck introduced the topic of why improving B2B pricing is worth doing but difficult, and how to get started
• Here we review examples of different types of pricing frameworks that are helpful in organizing and prioritizing pricing activities (the WHAT of pricing)
• Look for these related presentations on:
• Practical steps for how to improve pricing, from the WHAT and HOW, to gaining PERMISSION, making the changes SUSTAINABLE, and SHOWING progress
• Some practical tools that help improve pricing
• How to improve your price guidance to support negotiated sales
4© een Consulting GmbH
HOW to build a bridge to better pricing
Insights, knowledge, best practices Learn WHAT to do
Pricing and supporting skills HOW to get it done
Pricing team brand/reputation PERMISSION to do it
Improve processes, technology, data Make it SUSTAINABLE
Measure progress SHOW progress to maintain support
The focus of this presentation
5© een Consulting GmbH
Building pricing insights, knowledge, best practices
● Break the problem into pieces – build a framework
- Adds value by simplifying the problem while framing the conversation
- Keep tweaking, enriching, deepening as you learn more
- Keep communicating the core concepts so they become part of the company DNA
● Ruthlessly prioritize. Be transparent about it
● Start with a few projects targeted to help build up the knowledge base
6© een Consulting GmbH
Five dimensions of WHAT to build for a pricing framework that works
Clear priorities that should influence pricing decisions
Company Goals
Harmonized processes & data etc. to leverage scale
Standards
Who makes decisions based on insights, skills
Organization
Data and direction to support decision-makers
Information & Guidance
Process and technology to support and sustain
Consistent execution
A Pricing Process that is:
• Effective
• Efficient
• Sustainable
7© een Consulting GmbH
The framework will include multiple elements that can be scaled and embedded into core processes
• Foundational
• Pricing Framework and Process
• Waterfall
• Segmentation
• Value Maps
• Pricing dashboards
• Process oriented
• Price opportunity prioritization workshop
• New Product Pricing process
• Annual price change process
• Commercial Terms design
• Negotiated price exception management
• Specialized
• Price/Volume trade-off workshop
• Pack-size pricing logic
• Tail-product pricing logic
• FX reaction playbook
© een Consulting GmbH 8
Example pricing framework (1)
Pricing StrategySets the pricing
principles and priorities that apply to all
activities.
Price SettingSet the list prices.
Set the pocket price corridor targets
Commercial Terms and PoliciesDesign the discounts, rebates, policies for channel
partners and customer segments
Price ExecutionSet rules for negotiated sales and support.
Manage customer price exceptions.Monitor results
Price AdminAdminister agreed
prices with highaccuracy
Collect data to support guidance and analysis
© een Consulting GmbH 10
Example Pricing Framework (3, top level)
Strategy + Goals
Pricing Structure
Execute
Monitor + React
● 2-5 simple, easy-to-understand elements
● Clear boundaries between the different elements
© een Consulting GmbH 11
Example Pricing Framework: 2nd level elements (3, details)
• Offer Design• Product & Customer Segmentation• Price Setting (List Price)• Price Guidance (Pocket Price Corridor)• Delegation of Authority, Incentives • Capability development• Communication (internal, external)
• Product & Service Design(Value Architecture)
• Waterfall Design• Comm. Terms & Policies Menu• Process & Automation model• Price Governance model
• Transaction Price Process• Exception Management
• Metrics• Pricing Process• Price Outcome
(absolute, relative)• Adjust tactics, goals
Strategy + Goals
Pricing Structure
Execute
Monitor + React
12© een Consulting GmbH
• Start with company goals (short- and long-term)
• Assess impact on core processes:
• Portfolio Pricing
• Commercial Terms
• Price Execution
• Price Administration
• Recognize constraints and trade-offs: be challenging but realistic
• Design-in local flexibility and exceptions
• Seek buy-in from leadership
Pricing goals must be driven by company goals & constraints
Pricing Goals Tactics, Resources, Skills, Organization,
Processes, Tools
13© een Consulting GmbH
High-level pricing decision process flowP
roduct
Mark
eting
Custo
mer
Mark
eting
Sale
s, S
ale
s
Managm
ent
Set List PricesSet Price
Outcome Targets
Set available
discounts &
rebates
Set standard
national /
segment offers
Define opt-in
offers
Assign opt-in &
customized offers
Approve
Exceptions
Approve
Exception
(Sales Manager)
Approve
Exceptions
Price Setting
Commercial
Terms & Policy
Price Execution
(sales)
Define sales
pricing flexibility
Price
Execution
(approvals)
14© een Consulting GmbH
Design a price waterfall to help understand and harmonize the business
• Can you get to one waterfall across the company?
• Not to complex! It’s not the only view of pricing
• Align definitions of key intersection points with finance
• Adapt pricing reporting to align to the harmonized waterfall
• Establish a common control point (pocket price corridor)
• Continually reinforce the concepts and language
15© een Consulting GmbH
Establish a core pricing segmentation scheme, coordinated with sales and marketing segmentations
• Different customer segments may have very different requirements. It’s important to understand the value of the products to different segments
• Typical hierarchy of segments• Usage (e.g. industry) most important
• Geography• Channel• Behavioral most challenging
• Varying prices across segments requires having “fences” between customer segments
• Build by doing: start simple and enhance (note pricing segmentation often differs from marketing and sales segmentations)
16© een Consulting GmbH
A strong price guidance framework for negotiated sales is
based on the pricing power P
rod
uct
& S
erv
ice
V
alu
e D
iffe
ren
tiat
ion
Reduced Cost
DirectAdded Value
Less TangibleAdded Value
• Features that make the product more attractive to end-users
• Raises the “willing to pay” by indirect means, e.g. more reliable, simpler, etc.
• Reduces the cost to supply the end product
Value Differentiation Competitive Intensity
Customer perceived performance
Cu
sto
mer
per
ceiv
ed p
rice
Value advantaged
Value disadvantaged
• Brand position, strength
• Number of competitors
• Market shares
• Channel influence
• Supply/Demand situation
• Supply coverage
Customer
Segmentation
StrategicGoals
PricingPower
© een Consulting GmbH 17
A Channel Partner Commercial Terms Library helps focus CT effectiveness and clarity while enabling automation
What are the
BU’s strategic
objectives?
Meet
aggregate
sales targets
Total sales value
incentive
Sales growth rate
incentive
Sales target
achievement
incentive
Meet product
level sales
targets
Drive channel
collaboration
Reduce BU
risk exposure
Reduce BU
costs to serve
Respond to
market
changes
General product
incentives
Product value /
volume incentive
Product sales growth
incentive
Product sales target
incentive
Early commitment
incentive
Joint mktg / tech
support incentive
Information sharing
incentive
“Basic hygiene”
penalties
Exclusivity incentive
Cash on / before
delivery incentive
Early payment
incentive
General customer
incentivesSelf pick up incentive
Large order size
incentive
Reducing returns
incentive
Managed
discretionary
Payment mode
incentive
Loyalty programmes
CT based on sales outcomes Specialised CTCT based on activities
How can CT
support these
objectives?
Cross sales incentive
Outsourced logistics
payments
Channel inventory
reductionShare of
wallet incentive
Grow / defend
topline revenue
Improve
profitability:
products
Strengthen
channel
partnerships
Manage risks
Improve
profitability:
costs
https://www.linkedin.com/in/iantidswellpricinginfo@eenconsulting.com
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