Our pricing methodologies stem from our deep experience in Voice-of-Customer-driven commercial diligence and strategy - leveraging segmentation, deep understanding of buyers, and rigorous analysis
As commercial specialists, we think four factors are critical to growing the top line:
- Winning the right customers…
- … maximizing share of wallet …
- …with the right product mix…
- …and pricing those products effectively.
At GRAPH, we have honed a methodology for optimizing price that engages each of the four considerations. The right place to start on this list depends on our client company's place in their industry lifecycle: mature companies benefit most in their core business from product mix and price, as they more often have saturated their prospective customer bases; high-growth companies are often best off considering if they are targeting the right customers, and are positioned to win the maximum account potential (share of wallet) over time.
Read more about the origins of our methodology in our Pricing Journey GRAPH Paper here.
Our inspiration in creating our Pricing Opportunities service area was seeing a gap in most organizations when it comes to pricing as a topic. Today, many organizations attack pricing in multiple silos, using a:
- Sales lens (price controls)
- Marketing lens (pricing strategy)
- Product lens (product management), and/or
- Strategy lens (typically one-off efforts).
Our view is that much of the language and frameworks surrounding price are built in, and reflect, these four silos. Our approach is a method, a framework and a language for coordinating across these silos to tackle larger pricing improvements proactively.
GRAPH's pricing engagements culminate in an actionable playbook that involves changes to one or more of:
- Cycles – the frequency with which prices are adjusted
- Indexing or "price coupling" – the degree of contractual or de facto coupling of your product’s price against another good’s price, often benchmarked to an input, substitute, or industry competitor
- Realization – the percent of list price that is realized as the pocket price (i.e., that is captured after discounts, cost of capital, etc.)
- Premiumization – an increase in “mark-up” or gross margin
- Billing intervals – financing, subscriptions, gain-sharing, or other means for spreading customer’s cost
- Offer construction – bundling or unbundling of items in a sale
- Product mix improvement – a shift towards products with greater premiums
...and our work may include other case-specific considerations - for instance, software and services businesses can often incorporate more nuanced consideration of feature availability, reliability guarantees, and performance.
In the complex B2B decision-making world, "taking" price increases is often not as simple as updating terms or list prices. Instead, we conceptualize the process of achieving these improvements as "journeys" that differ by segments. In businesses with greater revenue concentration, this can occur even at the individual customer level.
Pricing opportunities are a natural fit with our broader commercial value and due diligence mandates - and we're excited to discuss our pricing offering both as a pre-transaction diagnostic and a post-transaction value lever.
Please reach out to us to continue the discussion. We would love to engage.
