1. Developed/Presented by:
Peter Maniscalco
Sr. Pricing Consultant
May 18, 2012
© Peter Maniscalco. All rights reserved worldwide

2. Agenda
 Introduction
 Distributor “Behaviors”
 Profit Levers & Price Waterfall
 Pricing Tactics & Strategies
 Summary
© Peter Maniscalco. All rights reserved worldwide

3. Introduction
 Pricing Factors
 Working with Distributors
 Company Sales Team
© Peter Maniscalco. All rights reserved worldwide

4. Pricing Factors
 Price “accordingly” in order to motivate
 Consider distributor’s end-user business
 Adherence to your company’s objectives
© Peter Maniscalco. All rights reserved worldwide

5. Working with the Distributors
 Negotiating tactics used
 Are they concerned about value?
 Does it matter if your product is a commodity
or not?
 Do value-added services matter?
© Peter Maniscalco. All rights reserved worldwide

6. Distributor “Behavior”
 Imposing time pressures for pricing
 Threatens to take business elsewhere
 Price “fishing”
 Threatens to escalate price negotiations
© Peter Maniscalco. All rights reserved worldwide

7. Distributor “Behavior”
 Makes unreasonable demands
 Needs a cost vs. sell price – margin issue?
 Compensate in price for distributor’s poor
end-user service
 Expects continued low prices on all types of
end-user business
 Claims your pricing lacks flexibility
© Peter Maniscalco. All rights reserved worldwide

8. Company Sales Team
 Pricing educated
 Product educated
 Clear understanding of corporate objectives
 Experienced or ‘rookie’
© Peter Maniscalco. All rights reserved worldwide

9. Profit Levers
 Most effective way for a company to realize its
maximum profit:
GET THE PRICING RIGHT!
 ‘Right price’ can boost profit quicker
 Leverage & payoff of improved pricing is high
© Peter Maniscalco. All rights reserved worldwide

10. 1%
Improvement
in… … Creates Operating Profit Improvement of
Price 12.3%
Var. Cost 6.7%
Volume 3.6%
Fixed Cost 2.6%
Note: Compustat, Deloitte analysis (2009); Impact estimate based on average Fortune 1000 company
© Peter Maniscalco. All rights reserved worldwide

11. Pricing Waterfall
 Important factor in helping more effectively
manage discounts that are offered
 Transaction Price Management -
Key aspect of basic pricing management
Point where product “meets” customer
Invoice vs. transaction price – difference can mean
significant reduction to bottom-line profit
© Peter Maniscalco. All rights reserved worldwide

12. Pricing Waterfall
 Concept shows a company where its products’ prices
erode between invoice price and actual transaction price.
In the Price Waterfall, each Component Represents a Revenue Leak
$5.00
0.15
Competitive 27.4% Off
Discount 0.10 Order
$4.75
Invoice
Size 0.30
Discount Payment
Terms Disc
0.37
Annual 0.35
Volume Off 0.20
Bonus Invoice Advertising 0.08 $3.45
Promo Freight
Dealer
List Invoice Pocket
Price Price Price
Note: Concept developed by McKinsey & Co.
© Peter Maniscalco. All rights reserved worldwide

13. Pricing Tactics
 Leverage your company’s advantage
 Discounting on incremental sales volume
 Get something in return for price
concessions
 Value-added services – e.g. priority
scheduling & delivery
© Peter Maniscalco. All rights reserved worldwide

14. Pricing Tactics
 Miscellaneous discounts – make sure limited &
controlled
 ‘Free’ product – in lieu of price discount.
 ‘Advertising’ allowance – ensure distributor’s
promotion of your product is quantifiable
© Peter Maniscalco. All rights reserved worldwide

15. Summary
 Control your price discounting
 Obtain something in return for concessions
 Leverage your company’s advantages e.g.
incumbency, size, etc.
 Offer value-added services
© Peter Maniscalco. All rights reserved worldwide

16. Contact Info
Peter Maniscalco, MBA
Contractor / Sr. Pricing Consultant
484-947-6450
peterm09@yahoo.com
http://www.linkedin.com/in/petermaniscalco
Twitter: @PeterPeterm09