Pricing decisions always combine elements of ‘science’ and ‘magic’. A scientific approach to calculating the cost base, combined with a clear understanding what customers truly value, allows businesses to establish a minimum base price as well as an upper limit when making pricing decisions.
Strategy: pricing and costing
September 19, 2018
0 17% profitability increase
Established a cost allocation framework and Pricing Model to increase top line revenue and reduce cost of low value services
Optimisation opportunities
Calculate the underlying cost base by division to determine resourcing costs
Calculate cost of acquisition by customer segment to inform sales Return on Investment
Provide a basis for the use of data in the pricing process to supplement experience and instinct
The Business Problem
Our client wanted advice on how to interpret performance to date, innovate their business model and improve their long term strategy.
Effigy Consulting Impact
Restructured the accounts to restate prior year results by division and provided a process to allow Divisional P&Ls to be maintained in the future
Launched an Excel based Pricing Model across the pricing team, provided transitional support as the new process was adopted
Improved the understanding of the importance of identifying what the customer values and suggested how that knowledge could be obtained
Provided guidance on how to use new customer insights and knowledge of the underlying cost base during the pricing process
Provided guidance on how customer insights impact decisions of how to structure engagements
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