Holden Advisors Blog

Recently, we've seen a number of negotiators get taken to the cleaners in business and politics when they just didn't know how to deal with a bully. You know who they are: they yell and scream at you, pounding the table throughout the process. Think about the current trade negotiations with China—the same thing happens in business all the time.

When deciding on the price to charge in the market, many companies look to price elasticity— how the volume sold changes with the price charged to work towards what they hope will be a profit maximizing price.

Is Your Product a Commodity? Is it really? Or, does your customer cry commodity to get you to decrease your price? Adele McLean talks about how you can get out from under the negotiation tactic "cry commodity" to avoid the commodity trap.

Customers buy your products for a reason—namely, the impact your products have on their business results. If they could get the same results without buying your solution, believe me, they would. They would gladly refocus their time and money on running their business.  

In Pricing with Confidence, Reed Holden described the profit power of choosing the right, and sometimes innovative, pricing model. A stellar example of innovative pricing is when GE disrupted the market for aircraft engines.  They introduced “Power by the Hour” which allowed airlines to pay for engine flight hours rather than allocating large capital sums to purchase engines up front. This innovation changed nothing about the high performance GE90 engines, but aligned with how airlines conducted business and reduced adoption risk by giving customers a predictable cost for what would otherwise be a large capital expense.

I recently spoke with a major supplier to semiconductor manufacturers. The semiconductor industry has a handful of global players owning 80% of the market. Predictably, the supplier’s business model is heavily reliant on a few large customers. Because of this reliance, the supplier’s marketing team is well-schooled in measuring value delivered to customers. They knew critical semiconductor KPIs like cost of ownership, yield, performance, and risk. Their value analyses align with improving performance in these key areas. The value toolset is impressive – I had never seen such models and spreadsheets that calculated value so completely.

I have been reflecting on Travis Umpleby’s article, 3 Qualities of a High-Performance Pricing Team, and I wanted to share some observations from my recent client work about teaming and its impact on project success or failure.

The CEO of a $9B technology firm reviewed various reports, each indicating that profitability was not improving despite taking several actions to increase revenues. The CEO met with senior leadership to urgently address this profit shortfall. Pricing, product, marketing, and even IT acted to address pricing and improve profitability. Unfortunately, confusion reigned as each department made demands of the other, independently made decisions, and resources were stretched thin. Implementations were delayed or poorly executed. It looked like the next quarter’s results were going to show little profit improvement. 

You probably heard about MoviePass by now.  For those who haven’t, MoviePass is a subscription that allows you access to a large theater network for a low monthly fee.  Not only does MoviePass create more customer visits in theaters, but increased spending on concessions, leading to overall incremental revenue for the industry.

Its hard to believe its been 10 years since we released Pricing with Confidence: 10 Ways to Stop Leaving Money on the table.  In that time, the book has become a global success, published in different languages, and read and followed by executives from Fortune 1000 B2B companies.