Today, price management is a differentiated management approach which optimizes anything which affects price. Therefore, our pricing projects do not generally focus on one-off measures, but ensure that price management as a whole is optimized.
Under normal circumstances, the optimization of all process steps can lead to an increase in the return on sales of between one and three percentage points – in some cases even more. With a revenue of EUR 100 million, this represents a profit increase of EUR one to three million. In every company, price management therefore represents a key driver for yield improvement.
Structure of price management
We use our integrated price management approach to structure price management. This represents a further development of the original pricing process. The following diagram gives an initial overview, and each of the single process steps are explained in detail below.
Integrated price management basically contains two different levels which need to be viewed in parallel. The first level determines the relevant contents, differentiated as follows:
- Pricing strategy
- Pricing at product level
- Customer-specific price differentiation and
- Price negotiation
Whilst the pricing strategy determines the overall direction, product pricing focuses on the definition of a consistent and competitive price structure. Customer pricing focuses on the management of conditions, and price negotiation eventually ensures that the defined prices are successfully communicated to customers.
All the steps together reveal considerable potential for achieving specific earnings increases.