B2B pricing: the how of

sustainable improvement

Ian Tidswell

February 2017
Ian Tidswell Biography
Founder of een Consulting, focused on helping B2B companies develop best-in-class
end-to-end sustainable pricing processes
Professional Experience
• Since 2016, Independent Professional, Switzerland
• 4 years, Global Head of Pricing, Syngenta, Switzerland
At a glance
• 2 years, Pricing Transformation Lead, Medtronic, Switzerland
• 6 years Partner, Head of Business Consulting, Vendavo Consulting, UK and USA
• Former McKinsey senior
• 4 years, Director, i2 Technologies, USA consultant with line
• 4 years, to Engagement Manager, McKinsey & Company, USA management experience
Selected Experiences in MedTech and agri-
• Developed a pricing framework & process for pricing innovations for out-licensing for leading diversified
chemicals business
industrial company
• Proven B2B Pricing
• Built the HQ global pricing team for Syngenta. Indirect management of in-country pricing managers transformation leader
• Lead multiple in-country projects for Syngenta to diagnose pricing opportunities and actions to address
price setting, commercial terms management & price execution challenges • Practical, hands-on
• Lead development of a global commercial terms/policy framework and playbook to align CT/P with approach with track
strategic goals in each country within Syngenta, improved CT/P performance and enabled automation record in value delivery
• Headed the strategic initiative to substantially improve, harmonize and automate Medtronic
International’s pricing processes across all major markets. Drove improved pricing & risk exposure • Based in Basel
Switzerland
• At Vendavo successfully led discovery, design and deployment of Vendavo price system at multiple
customers including chemicals, distributor, semiconductor, tire and mobile phone manufacturers • LinkedIn Profile
• Frequent speaker at global pricing conferences
Education • Email:
ian@eenconsulting.com
• Ph.D. Physics, Harvard University, Cambridge, Massachusetts, USA
• B.Sc. in Physics, Imperial College, London University, UK

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Introduction

• A previous slide deck introduced the topic of ‘why improving B2B

pricing is worth doing but difficult, and how to get started’
(http://www.slideshare.net/IanTidswell/why-improving-pricing-is-hard-but-worth-doing-and-how-to-get-started)

• Another slide deck reviewed examples of different types of pricing

frameworks that are helpful in organizing and prioritizing pricing
activities (the what of pricing)
(http://www.slideshare.net/IanTidswell/b2b-pricing-framework-elements)

• In this presentation we focus on practical steps to improve

pricing, from the what and how, to gaining permission, making the
changes sustainable, and showing progress
• Look for these other related presentations on:
• Some practical tools that help improve pricing
• How to improve your price guidance to support negotiated sales
(http://www.slideshare.net/IanTidswell/b2b-price-guidance-with-impact-putting-the-pieces-together)

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HOW to build a bridge to better pricing

Insights, knowledge, best practices Learn WHAT to do

Pricing and supporting skills HOW to get it done The focus

of this
Pricing team brand/reputation PERMISSION to do it presentation

Improve processes, technology, data Make it SUSTAINABLE

Measure progress SHOW progress to maintain support

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Five dimensions of WHAT to build for a pricing process
that works

Clear priorities that should

Company Goals influence pricing decisions

Harmonized processes &

Standards data etc. to leverage scale A Pricing
Process that is:
Who makes decisions based • Effective
Organization on insights, skills
• Efficient
Information & Data and direction to • Sustainable
Guidance support decision-makers

Consistent Process and technology to

execution support and sustain

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WHAT to harmonization is a key decision

• Harmonize a core set of the most

common and important elements
• Pricing framework, terminology

Importance (value, strategy)

Standard: Fully
• Product, Customer hierarchies Harmonized
Selectively or
• Waterfall structure
Partially
• Approval framework
Harmonized
• Standard price reports
• Deal structures
• Provide a frame for local Exception:
businesses to operate in Eliminate or
Local only
• Expect and support local
deviations where necessary Frequency & Commonality
• Keep the core as simple as
possible and plan for exception!

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 Simple factors should guide the decision on what and how
much to harmonize
Less Harmonization
Business Diverse product lines
Structure Local customers
Flexibility to meet customer
pricing & deal requirements
Go-to- Local flexibility, agility
Market
Ability to adapt to
the customer
Local prices segmentation
Decision
architecture Discount & rebates values,
schemes
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More Harmonization
Similar product lines
Global customers
Price consistency across
customers & geographies
Alignment to global
? strategic goals
Improved visibility,
automation, quality,
OPEX cost reduction
List prices, price guidance
Framework, commercial
term libraries
Keep it simple!
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 Gaining permission to improve pricing will depend
on your pricing team having the right skill mix

Process
Management

Pricing

Influencing

Analytics / Company
Problem Business
Solving

● What mix of skills does the team need?

● How will you obtain and build the skills?
● Note: required skills mix will change over time

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Generally a center-led pricing team structure is best

Level of Centralization Best for…

Centralized Industries with global customers:
• Single Group responsible for pricing decisions • Semiconductor
• Limited adjustments for regional differences • Aerospace
• Can be very sophisticated, but far from markets • Many chemicals

Center Led Most other global companies

• Hybrid: central strategic pricing organization
coordinating local centers of pricing excellence
• Centralized team provides guidance and
templates for execution in region or BU, best
practice identification and dissemination
• Balance of local and global
• Level of centralization can
vary significantly

Decentralized Special cases

• Territories make autonomous pricing decisions • Disparate, fragmented BU’s
• Fully recognize local variations, but likely to • Non-core BU’s
lead to misalignment across territories • Highly regulated
• Difficult to achieve and sustain highest
performance levels of pricing process

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A Centralized Pricing Group with clearly defined goals
and role is a best practice

• ‘Owns’ pricing process, systems, tools,

Owns the • Drives continuous improvement
pricing • Sets the standards for List prices, price corridors, discount & rebate
framework library, escalation design, etc. (values set locally)
• Identifies and disseminates best-practices into the organization
• Coordinates global price processes, e.g. annual price adjustments,
Manages the
cross-boarder price corridor, etc.
process
• Ensures pricing quality & consistency across the business
Promotes • Tracks pricing at corporate level
visibility • Provides baseline standard reports
• Supports business with the most complex & important pricing decisions
Resource for
e.g. large deals, new products, strategic initiatives
the business
• May be part of the escalation process
Reporting • Varies, but marketing is the most common

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In global organizations there are different pricing roles
• Responsible for pricing processes, best
practice development and dissemination
• Incentives aligned to pricing outcomes
Head of (but does NOT own specific prices)
Pricing • Reporting lines vary but head of
commercial ops or marketing is best

Regional Global Pricing

Pricing Leads Operations Transformation

Local Business
Analyst(s) Technology
Pricing Leads process

• Owns regional and local • Owns globally • Internal • Owns pricing

pricing processes aligned processes consulting focus systems
• Primary contact for incl. reporting • Prioritize business
pricing transformation • Works closely requirements for
• Own system use locally with HQ functions automation

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 Skills of the extended team are also important

Team Key skills needed

Product • Price setting
marketing • Price/volume analysis
• Price tracking
• Price exception analysis
Customer • Commercial Terms design
marketing • Customer Segmentation
• Price monitoring
Sales • Pricing basics
• Negotiation skills
Finance • Pricing basics
● Which teams and which skills should be
prioritized? Follow the money!
● Be crisp on “What’s in it for them”
● Training format: pricing specific at first, then
embed in regular trainings

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Ensuring the pricing team has impact

Recommendation Rationale

Have a plan, but be a little • Coherent, but not rigid,

opportunistic plans
Help solve high-profile • Builds credibility
problems
Follow-through on • Set expectations so you have
commitments a chance to exceed
Track and communicate • Have a plan and execute!
progress
Go where you have support • Increases odds of success
• Proves value to organization
Get others to tell the story • Build allies with wins
• Make them look good
Keep at it • Don’t let the setbacks stop
the momentum

● What is the reputation today?

● What do you want it to be?

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 Technology, data and process ensure sustainability
Key point
Build support for a price system
Understand data situation
Use “quick-and-dirty” tools to
get started
Develop the vision
Identify what decision points
need process automation
Use data-influenced rules to
reduce the # decision points
Standard vs Exception mindset
Estimate the value impact
Integrated is better
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Rationale
• Communicate value drivers
• Fix while starting to use
• Prove out the value
• Learn by doing
• Leverage frameworks & tools
• Continually test concepts
• ‘000s of decisions
• ‘00s of users
• Repeatable decision criteria
• Fast analysis needed
• Segmentation is key
• Keep the system simple!! ● It’s a challenging step
• Plan for exceptions
● When done right it will add huge value
• Higher pocket prices
• Reduced dispersion ● Technology deployment faster now, but
• Reduced errors, etc. deploy the right solution!
• Drives quality data ● “Once in a career” opportunity to
• Drives user acceptance transform your company!
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Pricing systems are much more than the analytics:

Effective Efficient

• Puts focus on key decisions points • Rules based pricing

• Scalable, optimized & pinpoint price

recommendations (cost-to-serve, • Clear roles and responsibilities
feedstock cost/index, plant
utilization, buying behavior)
• Improves process discipline
• Up-to-date embedded price
analytics and guidance
• Reduced errors from automation
• Facilitates collaboration across and integration
sales, marketing, finance
• Consistent pricing decisions
• Faster decisions (e.g. track
feedstock volatility)

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 Measure and communicate to show progress

Key points Rationale

• Accept that • Reality gets in the way
measuring price
performance is hard
• Accept you have • No other way to track value
to do it!
• Triangulate on the • Build up evidence from
impact different directions
• Different data speaks to
different audiences
• Track metrics • Relative performance over
consistently over time time tells you a lot

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 A triangulation approach to measurement is needed:
their is no one ‘magic’ metric
“PRICES”

Financials: Competitive
Pricing Performance Performance

• Price variance versus • Price and volume

previous year & budget performance versus
Pricing industry peers
• Specific initiative impact Impact
(e.g. relative Assessment
to untouched areas)
“PRICING”

Pricing Initiatives Pricing Process

& Must Wins Maturity

• Project and initiative • Measured against a

progress customized capability grid

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 Summary

Pricing is… Pricing also…

● challenging ● adds tremendous value
● takes time to show full potential ● is hugely satisfying

Key messages
● Holistic plan, keep adapting ● Build allies by helping
● Prioritize and target actions ● Track progress

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https://www.linkedin.com/in/iantidswellpricing
info@eenconsulting.com