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Pricing and Profitability Management

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If your organization is like most, pricing is a set of disparate activities carried out in different parts of the business. And in many businesses, each function – Finance, Marketing, Sales and Operations – works with a different set of data to make pricing decisions. Different functions also often define goals and reward performance using different metrics, which can be in conflict with each other.

Effective pricing management can help you increase profitability by improving the way you analyze, set and deliver prices, including enforcing pricing policies. And the benefits can be realized in good times and bad. The tools and discipline of pricing and profitability management can help a business address the immediate issues presented during economic instability, as well as help position the company for long-term profitable growth.

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One piece at a time

When companies do take on pricing, it can be hard to know where to start. The job of setting the right price is only the most visible part of the overall strategy, which can engage nearly every part of the business. The more effective course is to take on the challenge of pricing in bite-size portions that set clear, aggressive goals within tight timelines. Important steps - like segmentation, improving price execution processes, or understanding profitability at the customer, product or channel level - can be executed within 100 days. And, as an interconnected whole, they can add up to significant long-term changes.

No matter where you start, gaining transaction-level insights –that is, knowing exactly what is happening in each and every sales transaction– is the key to understanding exactly where and how a company’s pricing and profitability can be improved. Armed with these insights, you can align spending on individual clients with the value they create. For example, a discount is an investment in your customer. Are you getting the right level of return on that investment? Do you know which customers consume the most technical support? All customers are not created equally. Transaction-level insights can help you understand the differences more clearly – and change your pricing accordingly.

How we can help

Deloitte is routinely ranked as the top pricing practice in the world by leading analysts.We offer an end-to-end approach to improving the entire spectrum of pricing capabilities, not just bits and pieces along the way. Strategy. Price optimization. Process improvement. Organization design. Transaction analysis. Technology selection and implementation. Change management. We put it all to work together, building on transaction-level insights to help some of the world’s most successful companies become even more competitive through improvements in pricing strategies, processes and capabilities. And when it’s time to put technology to work in support of your plans, we have close alliances with the top solution vendors to help you get more value, faster.

Here are some of the ways we can help:

  • Understand your profit drivers through detailed analytics - including transactional analysis, advanced segmentation and price optimization
  • Maximize profitability with value-driven pricing strategy and optimization, set in motion by demonstrated implementation capabilities
  • Sustain profitability by establishing an infrastructure that makes it easy for you to take the reins, accounting for the people, processes and technology aspects of the strategy

Bottom-line benefits

  • Add as much as three percent of addressable revenue to the bottom line in the first six to 12 months
  • Improve predictability of profit and volume
  • Deliver better visibility to pricing and margin information to improve decision making
  • Reduce margin leakage by improving measurement and management of sales activities
  • Increase control of transaction profitability through active management of pricing execution
  • Create a sustainable approaches that can deliver results for years to come

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Meet our people

Ranjit Singh
Principal, Deloitte Consulting LLP
Joe Dworak
Principal, Deloitte Consulting LLP
Julie Meehan
Principal, Deloitte Consulting LLP
Larry Montan
Director, Deloitte Consulting LLP
us_john_norkus_60x60_100813.jpg John M. Norkus
Principal, Deloitte Consulting LLP
us_consulting_rich_nanda_60X60_041213.jpg Rich Nanda
Principal, Deloitte Consulting LLP
us_lisa_thompson_60x60_100813.jpg Lisa Thompson
Principal, Deloitte Consulting LLP
us_consulting_JoeZale_60x60_102213.jpg Joe Zale
Principal, Deloitte Consulting LLP
Dr. Thomas Nagle
Senior Advisor, Deloitte Consulting LLP

Spotlight

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    A pricing analytics solution combining proprietary algorithms, sector-specific data models, and predictive analytics.

More Watch, listen and learn

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    Join us on November 20 for the Dbriefs webcast to understand opportunities that pricing can yield for short-term and long-term revenue growth and how CFOs can use pricing to help lead a company's growth agenda.
  • Debate: Understanding the economics of a business: Top down or bottom up?
    Should you follow the lead of sophisticated investors and apply a value-based approach to managing your business? And if so, what’s the best way to do it?
  • Isn’t more analytics the answer to solve your pricing challenges?
    Analytics promises to deliver more data-based insights to pricing decision-makers. Is that all you need?

More Related links

  • Pricing and Profitability Management: A practical guide for business leaders
    This book is full of strategic advice as well as practice insight to help your organization in its efforts to improve pricing management capabilities.
  • Pricing analytics - The three-minute guide
    Analytics can lead the way on pricing and customer profitability.
  • Pricing from ahead
    Learn how pricing from ahead can help retailers win in the age of the connected consumer.
  • The price of pricing effectiveness
    Is the view worth the climb? Read the Deloitte Review article to find out.

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