Holden Advisors Blog

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.

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.

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.

Celebrating 10 Years of Pricing with Confidence (video 2 of 11).

By Alison Yama

Recently we performed a pricing outlier analysis for one of our clients.  Like any good pricing analyst would do, the team started with identifying customers receiving heavy discounts, or what we call “low hanging fruit."  We realized that after addressing the low-hanging fruit and creating visibility via a dashboard, we needed to turn the organization’s attention to the high-paying, loyal, Relationship-buying outliers also.  Why?  

Celebrating 10 Years of Pricing with Confidence (video 3 of 11).

Ellen Quackenbush discusses the second rule in Pricing with Confidence - "Understand the Value You Offer to Your Customer."  

You can't have confidence in your pricing until you have confidence in the financial value that your offerings have on your customers' bottomline.  Even though managers are convinced they can't get this kind of information, the reality is that most of your customers are eager to talk about it. All it takes is asking the right questions and being willing to listen. 

*Download an Improving Practice Plan so you can follow along with all videos and plan how to drive profitable changes in your organization: 

Order the book: Pricing with Confidence: 10 Ways to Stop Leaving Money on the Table

Celebrating 10 Years of Pricing with Confidence (video 4 of 11).

Celebrating 10 Years of Pricing with Confidence (video 5 of 11).