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Price performance uplift

A global market leading machinery supplier was struggling with increased price pressure resulting in a downward trend of constantly reduced prices to maintain market shares

The client had previously been the performance leader in the market and able to charge a price premium. Competitors had however caught up on performance and with increased market transparency initiated a direct price competition on component sales. The management team was struggling to maintain margins and understood the need for defining and implementing a price strategy globally across independent regional business units.

OPX Partners started with a hands-on diagnostic phase across all regional business units to understand the current market situation and competitive landscape. We conducted deep interviews and participated in customer sales meetings to understand the situation. This combined with a detailed quantitative analysis of revenue and margin contribution from customers, products and sales representatives served as the basis for identifying and prioritizing improvement initiatives. It became clear that the main improvement areas were:

  • Bundle product offering to move away from component comparison and instead offer increased value through tailored packages justifying a price premium

  • Introduce price point levels for new bundles to work with price perception and steering the customer to most profitable products for the client

  • Launch new discount structure to stop margin leakage and promote desired customer behavior (size, growth and exclusivity)

A new price model was designed addressing all the above areas. Managers and sales representatives, were involved in the process to ensure buy-in and building a case for change. The new model was piloted in a selected market to get customer feedback and understand training needs for the sales representatives.

OPX Partners developed and facilitated hands-on training programs for all sales representatives including sales scripts, FAQs, internal and external communication. A centralized pricing process with supporting infrastructure was also implemented, with tools, activities and clearly defined internal owners to ensure that the client could conduct price updates semi-annually to maintain a competitive price position in the market.

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