Presentation slides from RISE Austin 2011 Session on Pricing, Profits, and Quality of Life.

1. Welcome to
RISE WEEK 2011
Improving Pricing, Profits,
and Quality of Life
Hosted by
Reuben Swartz
President, Mimiran

3. “The single most important decision in
evaluating a business is pricing power.
If you’ve got the power to raise prices without losing business to a competitor,
you’ve got a very good business. And if you have to have a prayer session before
raising the price by 10 percent, then you’ve got a terrible business.”
Warren Buffett

4. AGENDA
• Why pricing
• How to price more profitably
• Be better, not cheaper
• Segment
• How to handle the toughest competitor
• Beyond profit

5. EXAMPLE: PRICE CHANGE AT
30% MARGIN
Case 1: Case 2:
10% Discount 5% Price Increase
Revenue
Revenue
4

6. EXAMPLE: PRICE CHANGE AT
30% MARGIN
Case 1: Case 2:
10% Discount 5% Price Increase
Must sell 50% more volume to break even.
Revenue
Revenue
4

7. EXAMPLE: PRICE CHANGE AT
30% MARGIN
Case 1: Case 2:
10% Discount 5% Price Increase
Must sell 50% more volume to break even.
Can sell 14% less volume to break even.
Revenue
Revenue
4

8. EXAMPLE: PRICE CHANGE AT
30% MARGIN
Case 1: Case 2:
10% Discount 5% Price Increase
Must sell 50% more volume to break even.
Can sell 14% less volume to break even.
Revenue
Revenue
Which case is easier for your sales team to achieve?
Which case will result in greater customer satisfaction?
4

9. WHAT’S THE PRICE?

10. COST = $230-$350

11. THE PRICING WINDOW

12. THE PRICING WINDOW
Min Price

13. THE PRICING WINDOW
Max Price
Min Price

14. THE PRICING WINDOW

15. THE PRICING WINDOW
Min Price (limited by Variable Cost)

16. THE PRICING WINDOW
Max Price (limited by Perceived Differential Value)
Min Price (limited by Variable Cost)

17. THE PRICING WINDOW
Max Price (limited by Perceived Differential Value)
Min Price (limited by Variable Cost)

18. THE PRICING WINDOW
Max Price (limited by Perceived Differential Value)
Cost Plus X%
Min Price (limited by Variable Cost)

19. COST-BASED PRICING TEST:
ARE YOU:

20. COST-BASED PRICING TEST:
ARE YOU:

21. COST-BASED PRICING TEST:
ARE YOU:

22. VALUE
“What is a cynic? A man who knows the price of everything
and the value of nothing.” - Oscar Wilde

25. “A wallet they’ll fight over
when you’re dead.”

32. 24oz bottle
$0.07/oz

33. 24oz bottle
$0.07/oz

34. 24oz bottle 32oz bottle
$0.07/oz $0.079/oz

35. $0.10 $0.18

36. $0.10 $0.18 $3.00

38. SO WHAT’S THE RIGHT PRICE?

39. SEGMENTATION
Price
Demand

40. SEGMENTATION
Price
Mass Market
Demand

41. SEGMENTATION
Price Mid Market
Mass Market
Demand

42. SEGMENTATION
Premium
Price Mid Market
Mass Market
Demand

43. HOW TO HANDLE THE
TOUGHEST COMPETITOR

45. “WE ARE OUR
OWN TOUGHEST
COMPETITOR.”
-SVP SALES,
FORTUNE 500 MANUFACTURER

46. Price
Demand

47. Price
Demand

48. Price
Demand

49. Price
Demand

50. Price
Demand

51. Price
Demand

52. ARE WE
DOING
THIS
RIGHT?

53. WHAT’S THE ROI?

54. WHAT’S THE ROI?
Costs
2%
Gross Cost
33% SG&A
DepreciaFon
65%

55. WHAT’S THE ROI?
Costs
Costs 1%
2%
22%
Gross Cost
Gross Cost
SG&A
33% SG&A 32% DepreciaFon
DepreciaFon
Discounts
65%
44%

56. Price
Demand

57. Price
Demand

58. Price
Demand

59. Price
Demand

60. VALUE-BASED DISCOUNTING

61. WHAT TO MAXIMIZE?
Price ($)
Volume

62. WHAT TO MAXIMIZE?
Demand
Price ($)
Volume

63. WHAT TO MAXIMIZE?
Demand
Revenue
Price ($)
Volume

64. WHAT TO MAXIMIZE?
Demand
Revenue
Price ($)
Cost
Volume

65. WHAT TO MAXIMIZE?
Demand
Revenue
Price ($)
Cost
Profit
Volume

66. WHAT TO MAXIMIZE?
Demand
Revenue
Price ($)
Cost
Profit
Volume

67. WHAT TO MAXIMIZE?
Demand
Revenue
Price ($)
Cost
Profit
Price that maximizes revenue
Volume

68. WHAT TO MAXIMIZE?
Demand
Revenue
Price ($)
Cost
Price that maximizes profit
Profit
Price that maximizes revenue
Volume

69. WHAT TO MAXIMIZE?
Demand
Revenue
Price ($)
Cost
Price that maximizes profit
Profit
Price that maximizes revenue
Volume

70. BEYOND PROFIT

71. HAVE A PLAN
Value Model Revenue Model Pricing Model Discount Plan

73. “In theory there is no difference between theory and
practice. In practice there is.”
- Yogi Berra

74. “In theory there is no difference between theory and
practice. In practice there is.”
- Yogi Berra
“It is the theory that decides what can be observed.”
-Albert Einstein

75. “In theory there is no difference between theory and
practice. In practice there is.”
- Yogi Berra
“It is the theory that decides what can be observed.”
-Albert Einstein
FROM THEORY TO PRACTICE
Q&A

76. THANK YOU
www.mimiran.com

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