Small changes in average price can translate into huge changes in operating profit—to the benefit of a company when average price goes up, and to its detriment when average price goes down. We believe that sustained above-market growth comes when granular pricing analytics deliver credible insights with easy-to-use tools to the front lines. While we work with our clients to develop effective pricing strategies and unlock pricing opportunities, the majority of our focus is spent on building the right set of capabilities and management conviction to implement and sustain the gains. We take a “strategy before structure” approach by identifying what needs to be done and then working with the client to build out the tools, people, and systems to do it.
With this approach, our clients have improved their return on sales by 2 to 7 percentage points or more within 1 year, and sustained that growth over the long term.
Our “fully loaded” service incorporates a complete package of skills and assets to support clients with any pricing issue: proprietary benchmarking and data-driven insights, enterprise quality software that combines McKinsey knowledge and client data to provide tools for frontline managers, proprietary training approaches and e-learning tools to support long-term implementation, big data and advanced analytic models and tools to capture and sustain the gains.
WHAT WE DO
We help clients turn pricing into a sustainable profit engine by:
Discovering the real value of each product for each customer segment in order to set the best prices. We develop tools that process big data to uncover pricing opportunities at the most granular levels to identify patterns and size opportunities. That includes identifying transaction level insights on sources of leakage to help clients make rapid changes that “ring the cash register” quickly.
Designing market strategies based on a deep understanding of how pricing is connected to the business’ goals and what competitive pressures are affecting the market.
Delivering prices to the marketplace through an infrastructure that incorporates processes, organizations, systems and tools, and performance-management approaches that are relevant to the business. The greatest tool in the world won’t help a company that doesn’t have the people and processes to act on what the tool provides. For this reason, we take special care to connect all the elements of the pricing function with the business and the sales people on the front lines. We provide the training, tools, and capabilities for our clients so they can sustain their growth over the long term. We have established capability-building centers, for example, for on-site training, and have a dedicated implementation group that works side by side with our clients to help put recommendations and programs into the field.