Intuitive pricing and lack of market segmentation leading to lost business potential
As a top provider of Maintenance, Repair, and Operations (MRO) services for commercial aircraft engines, our client was losing out on opportunities without a structured pricing strategy.
Our client dealt with a large variety of deal sizes and lacked a systematic approach to pricing. They wanted to increase deal success and capture the willingness to pay across different market segments.
However, we had a complex situation at hand. The client used a detailed cost and risk calculation and only one minimum margin as price steering elements. There was no market, customer, or deal segmentation in place, making the pricing heavily dependent on the “gut feeling” of the sales team. As a result, the MRO provider faced low-value capture in several deal situations.
Implementing value-based pricing, step by step
We analyzed the status quo, built a database, and created a state-of-the-art pricing logic.
Our team designed a value-based peer pricing model and a decision support tool to enable performance-oriented pricing decisions for our client’s sales team. This included a deal database to organize and classify previous deals to generate deal groups. Leveraging the database and using advanced statistical simulation, we derived new prices and developed a new price-finding algorithm.
+2.5 percent ROS gain through a new pricing and tendering solution
We accomplished several client goals successfully, including prioritizing target segments and implementing a new value-based pricing and tendering solution. Together, the measures led to a significant increase in sales revenue.
