Hot on of the heels of an eventful month in the Syncron family, our team hit Dallas, TX to attend the 29th Annual Fall Pricing Workshops & Conference at the Renaissance Dallas Addison Hotel.
The event is hosted by the Professional Pricing Society (PPS), an organization comprised of more than 4,800 members from a whopping 75 countries! The organization hosts five major pricing conferences a year, and since its founding year, PPS has been focused on bringing pricing’s foremost thought-leaders together for events, workshops and online courses to facilitate ongoing learning, networking and shared experiences.
Our team enjoyed the many valuable and memorable interactions had at the Syncron booth, including witnessing a pricer from Hitachi Vantara become the lucky winner of our coveted giveaway: the New Series 4 Apple Watch!
It was an incredible week of networking, conversing and learning alongside some of the best pricing leaders in the industry. But, in addition to our time on the sponsor hall floor, we were also able to glean some powerful insights from our very own pricing expert, Cliff Issacson, on the impacts of technology on pricing and best practices for keeping pricing competitive in a digitized world.
Read more below from Cliff as he discusses today’s biggest trends in pricing and how to use those trends to revolutionize your business.
We’re all driving a shift towards products delivered as a service – otherwise known as servitization. Why have your car serviced when you can order Lyft or Uber, hop on a scooter, or even subscribe to a Porsche or Cadillac service? Business transformations are being driven by the dizzying valuations of these dynamic services, and now, even non-transportation OEMs are moving towards offering their products as a service. Servitization is part of a broader trend as manufacturers become more customer-centric. This can mean changes like value-based pricing, the pricing of finished goods, parts, and services based on their value to their different customers are causing a big shift away from cost-plus mentalities. This has all driven growth in sophisticated pricing approaches, particularly service contract pricing.
But, understanding what an original equipment manufacturer’s (OEM) customer values most can be a complicated task. They may value the physical metrics of goods – like capacity, power, or voltage – or, they may value non-physical metrics like product availability, the cost of service (repair or upgrade) relative to capital good replacement, application use, and other subjective metrics. Customer panels, elasticity studies, and other qualitative (and quantitative) methods can be used to determine and test what drives customer value, but sometimes, simple availability of data and metrics can actually determine what influences pricing and demand. But, once you determine what metrics drive value, how do you determine competitive price positioning? Are you up against another OEM? An aftermarket alternative? Your own used or remanufactured item?
Understanding which markets offer competitor substitutes for your products and services, and how competitive the availability of service technicians is in your markets can help position prices. That’s where the part, service, or product is in its lifecycle can inform this selection – availability of this data can also determine how you position your value relative to the competition. This is where truly global, distributed, scalable pricing solutions stand out. Service contract pricing leverages these best practices in pricing parts, service technician labor, planned maintenance activities and common repairs. Planning systems that calculate part usage and predictive part failure based on planned availability, product uptime, service level, cost of planned maintenance, cost of predictive repairs and other service contract attributes are also necessary.
Once list service contract pricing options are determined, market, channel, and customer level pricing can be determined. The benefits of service contract pricing to the customer are considerable: costs are predictable, the customer has documented service guarantees, the OEM is presumably better at maintaining goods, predicting and preventing failures, and the OEM is now incentivized to avoid product downtime. The key for OEMs is starting with better, value-driven part and labor pricing, costing different service contract options as accurately as possible, pricing the contracts themselves based on value drivers, and managing customer contract quoting using optimized discounting models. Ultimately, by becoming more strategic, pricing can support the business transformation from selling commodities periodically, to engaging with customers over a lifetime.
Stay tuned as we look ahead toward the 29th Annual Spring Pricing Workshops & Conference in Atlanta, Georgia – the home of Syncron’s US Headquarters!