The SPA Pricing Cube™ combines your understanding of markets with SPA’s powerful analytics, to identify the optimal pricing architecture for your business, focusing discounts on the most price-sensitive products and customers, where it will have the biggest payoff in competitive positioning; and extracting small premiums on less-sensitive products and customers.
The SPA Pricing Cube™ takes the guesswork out of optimized pricing in complex environments, allowing your sales force to focus on serving the customer and driving value. Our process provides for flexibility and discipline in pricing, to create a balance that works in your business.
Many complex companies have missed fundamental opportunities to manage pricing in two key dimensions. Often many customers are getting lower prices than they should and low-sensitivity products are not generating price premiums. The combination is typically worth 2 to 4 margin points.
The following describes what the SPA Pricing Cube™ can do for your company.
- Provides a foundation for setting pricing standards in complex environments
- Strategic Pricing Standards are structured around market segments, customer sizes, and product/service sensitivity
- Provides a foundation for organizing transaction data for purposes of comparative indexing analysis
- Analyzes client invoice data looking at customer’s product baskets, order patterns by product, and relative spend by product
- Analyzes key predictors of price sensitivity including order frequencies, volumes, and repeatability
- Assigns every customer to a market segment and customer size and/or sensitivity level; every product/service is assigned to a product/service family
- Profiles every product/service for price sensitivity, at the segment level or at the customer-specific basket level
- Analyzes distribution of many properties by customer and across groups of customers
- Result: recommended price premium map to SKUs and vendors by individual customer or customer group
The SPA Pricing Cube™, our proven pricing analytics tool, is available in Silver, Gold, and Platinum levels to provide the right tool to match a company’s current pricing process sophistication and desired impact; we recommend starting with Silver. The following describes the difference in the various levels.
- Architecture: Basic
- Data Services: Basic Sensitivity Ratings
- Pricing Structure: Basic Type-Size Values; and Constant Slopes and Premiums
- Impact: Good – Estimated 1.0x (2% Gain)
- Architecture: Intermediate
- Data Services: Dynamic Sensitivity Ratings (more C/D revenue)
- Pricing Structure: Differential Type-Size Values; and Dynamic Slopes and Premiums
- Impact: Better – Estimated 1.5x (3% Gain)
- Architecture: Advanced
- Data Services: Dynamic Sensitivity Ratings, Type- and Customer-Specific
- Pricing Structure: Dynamic Type-Size Values and Dynamic Slopes and Premiums; Customer-Specific Sensitivity, Behavioral Scoring and Cost-to-Serve
- Impact: Highest – Estimated 2.0x (4% Gain)
Click here for more information about capturing pricing opportunities and improving your bottom line using our proven processes and tools.
Click here for a quick questionnaire to determine the impact Strategic Pricing can have on your company’s bottom line.