The overall objective for our clients is to grow the net revenue for the benefit of stakeholders. By using analytic models based on actual transactions and real-world experience, we are able to identify strong opportunities for growth and performance improvement which enables the client company to continue to prosper. The result of a z2m4 pricing analysis and improvement engagement is as follows:
- Reduced frequency and amount of discounts
- Reduced sales time and loss of business due to price competition
- Higher profit margins
- Sales training for pricing and discounting
Most customers have set prices and either adapt prices and discounts to individual sales situations, or maintain an arbitrary pre-defined transaction price without regard to whether they are risking business or maximizing profit margins. The first step in the z2m4 pricing improvement process is to evaluate recent and historical transactions in terms of list prices, discounts and volumes, by product, channel partner, end customer, geography and other factors. Based on this initial assessment, we can identify opportunities for further analysis which will result in recommendations for improving pricing and meeting overall company objectives.
By leveraging economic value analysis, we are better able to establish the value of the company's products and solutions rather than defend against low-price perceptions of other competitors, or to attract more potential customers in a price-sensitive market. From actual data and other information, we can identify whether pricing actions are necessary to acquire more customers, prevent existing customers from switching to competitors, or whether customers are ripe for additional revenue opportunities. While most customers have an existing pricing strategy which is intended to place them in a price-advantage position with competitors, we are able to develop broader pricing strategies based on economic value modeling which help identify the best opportunities for acquiring new customer, penetrating the market faster, or positioning the company's products and services more effectively with target markets, end customers, channels of distribution and solution partners. We alignpricing with corporate objectives for growth and profitability.
The z2m4 pricing analysis and improvement process is ideal for developing product lines that are targeted for specific segments of the market. We identify opportunities for entry-level and penetration pricing to acquire customers and gain market share, in addition to opportunities to sell higher value solutions to customers willing to pay more for the perceived value. Similarly, we identify opportunities through quantitative analysis of the product portfolio for up-selling and cross-selling of additional products which the customer is likely to want.
Most products and services are never sold at a stated list price, especially in a sophisticated and competitive market. For most company's this results in inconsistent and unpredictable sales and financial performance. We use economic analysis to identify how discounting is managed and how it affects the profitability and cash flow of the company. Our price optimization process uses recent and historical data to identify how to adjust prices and implement rational discounting policies in order to maximize profit margins, reduce costs to serve certain customers, and prevent unnecessary loss of business to competition. Bottom line results have been in the range of one percent to more than five percent for a company or product line, without risking the loss of business to competitors.
As with all of the z2m4 services, we are committed to following through with the client company to successfully implement price optimization improvements. We provide tools, presentations, and recommendations for how best to implement business processes and utilize existing systems, in addition to recommendations for how to increase their effectiveness over time.