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What is Price Realization, andHow Does It Impact Your Bottom Line?

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I bet you hear all kinds of pricing advice:

“Increase your prices by 2%.”“Decrease your prices for your price-conscious markets.”

“Add value anywhere and everywhere to drive customer loyalty.”

What is Price Realization, andHow Does It Impact Your Bottom Line?

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Unfortunately, even the best pricing advice can’t work for every single

one of your transactions.

That’s why price realizationis so important.

What is Price Realization, andHow Does It Impact Your Bottom Line?

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Price realization measuresactual vs. expected price achieved.

You can’t sell at target price every single time, but that’s the goal. (Or rather, it should be.)

This discrepancy is one metricyou need to measure.

What is Price Realization, andHow Does It Impact Your Bottom Line?

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Price realization analysis allows you to:

What is Price Realization, andHow Does It Impact Your Bottom Line?

1. Closely monitor sales teams and their selling tactics2. Understand how customers respond to pricing changes3. Leverage discounts strategically

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5 Ways to AchieveProfitable Price Realization

What is Price Realization, andHow Does It Impact Your Bottom Line?

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1. Make Discounts Strategic

Price concessions can destroy your profits. Discounts undermineyour entire pricing strategy.

What is Price Realization, andHow Does It Impact Your Bottom Line?

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But you can’t give them up either.

You’ve got to make them strategic.

How?

What is Price Realization, andHow Does It Impact Your Bottom Line?

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1. Set a maximum threshold for discounts.2. Hold your sales reps accountable for selling

off target price.3. Incentivize on price discipline.4. Train sales professionals to sell on value.

What is Price Realization, andHow Does It Impact Your Bottom Line?

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2. Align Price With Value

If you can’t change the customer’smind about the price of a deal, it’s

time to change the deal itself.

What is Price Realization, andHow Does It Impact Your Bottom Line?

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What value element are yourcustomers willing to give up?

They have to take a cut on thedeal to get a cut on the price.

What is Price Realization, andHow Does It Impact Your Bottom Line?

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1. Remove value when decreasing price.2. Segment customers by the deal components

they value. Serve them accordingly.3. When customers ask for a discount, ask what

they’d be willing to give up.

What is Price Realization, andHow Does It Impact Your Bottom Line?

How to Drive Value-Based Pricing:

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3. Segment Prices with Mix Data

Earn the highest profit on every dealby customizing your prices for every

deal.

What is Price Realization, andHow Does It Impact Your Bottom Line?

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Finding the perfect price for each transaction captures the most margin.

Unfortunately, that’s difficult to nail down.

What is Price Realization, andHow Does It Impact Your Bottom Line?

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Different markets, customers, channels, and products all require different pricing strategies.

When you start mixing and matching between them, things get even more complicated.

What is Price Realization, andHow Does It Impact Your Bottom Line?

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1. Evaluate your transactions for the past year.2. Segment your deals and customers into the

smallest groups possible.3. Build custom prices for each of these

segments, further segmented by situation, if possible.

What is Price Realization, andHow Does It Impact Your Bottom Line?

How to Build a Pricing Cheat Sheet:

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4. Increase Your Prices

Yes, it seems counter-intuitive.

But you wouldn’t believe how many businesses underprice their products and

services!

What is Price Realization, andHow Does It Impact Your Bottom Line?

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You should increase prices on a regular basis.

It seems scary, but as long as you continue to drive value and sell on that value, your

customers will understand.

What is Price Realization, andHow Does It Impact Your Bottom Line?

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1. Start with products with least price resistance.

2. Price for the entire package, all value propositions included.

3. Keep increases realistic. A 1% increase makes a big difference in profits.

4. Give your customers fair warning. Don’t just roll out a price increase.

What is Price Realization, andHow Does It Impact Your Bottom Line?

How to Successfully Increase Your Prices:

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5. Measure Regularly

Achieving price realization is an ongoing effort.

Monitor the differences between your target

and actual prices on an ongoing basis.

What is Price Realization, andHow Does It Impact Your Bottom Line?

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Here are a few sales reports to consider:

What is Price Realization, andHow Does It Impact Your Bottom Line?

1. Actual period over period price realization2. Number of discounts given out and monetary amount of

margin lost through these discounts3. Value decreases on deals and success rate for these value

decreases4. Overall margin lost through price concessions

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Here are a few finance reports to consider:

What is Price Realization, andHow Does It Impact Your Bottom Line?

1. Disparity between actual and target prices bya. Sales repb. Productc. Channeld. Customer segment

2. Margin losses and gained as a result of the new price realization strategies

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Achieve Price Realization with Faster Data Analysis

Stop torturing your team with more reporting.

Put your data to work with anefficient analytics application instead.

What is Price Realization, andHow Does It Impact Your Bottom Line?

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KiniMetrix helps companies align pricing metrics and build profits and growth.

Analyze your prices accurately and easily across customer, market, products,

sales reps, and other criteria.

Click here to see how KiniMetrix

can do this for you.

What is Price Realization, andHow Does It Impact Your Bottom Line?