Pricing

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  • This is one side of the coin. What we also know from our empirical pricing studies: many managers do not take the trouble to develop a pricing strategy for their own company. This is surprising - after all, there is no bigger profit driver than the price.

Enforcing Prices

We often hear complaints from entrepreneurs and executives about aggressive competitors, about a low willingness to pay of customers, about the decline of prices and margins, about new discount business models and price-aggressive online competitors.

This is one side of the coin. What we also know from our empirical pricing studies: many managers do not take the trouble to develop a pricing strategy for their own company. This is surprising – after all, there is no bigger profit driver than the price.

For more than 15 years, pricing has been an important consulting focus of UNICconsult. We proceed according to the RSEC model: hypothesis-driven Research is the starting point for formulating a comprehensible and clear Strategy for pricing. Professional implementation tools (Execution) ensure effectiveness in everyday life, and Controlling of pricing creates the necessary transparency of successes.

In addition to pricing projects, we conduct open and in-house pricing seminars, and empirical studies on customers and competition serve to verify hypotheses within the framework of pricing research.

Strategic Pricing

Supply and demand determine the price according to neoclassical economic theory. With the help of price-sales functions and corresponding cost functions, companies can then determine the “optimal” price. So much for the theory. That the internal processes in a company that is active in different business units in several countries make things a bit more complicated, has now become known. To get to a somewhat more realistic view, we work in our study with the RSEC process model, which summarizes pricing in an ideal-typical way. It consists of four core processes of pricing.

The four core processes of pricing

  • 1. Research

    Price strategies can only be formulated sensibly if one has corresponding insights into the market, the competition and the customer. Pricing research processes are dedicated to the question of how to gain insights into the relevant environment that form the basis for a pricing strategy.

  • 2. Strategy

    The pricing strategy determines the long-term course of a company in terms of the pricing positioning of the product and service portfolio – ideally in close coordination with the corporate and marketing strategy. We have investigated how pricing strategies are developed, how they are disseminated within the company and how they are applied.

  • 3. Execution

    An adopted (price) strategy does not implement itself. Here, employees in the various departments of the company are required to create price lists or offers, approve discounts, plan prices for the coming business year, communicate prices to customers. These are very basic processes that serve to implement the pricing strategy. There is a corresponding toolbox for this.

  • 4. Controlling

    At the end of a process there is always the review. How systematically is the implementation of the pricing strategy measured, which instruments are available for price controlling, what does the IT support for these processes look like? We devote ourselves to this question in the fourth core process of pricing. The derivation of pricing scorecards and the construction of pricing data warehouses are part of this pricing module.

Pricing Study 2023

The current pricing study is the fifth edition of the empirical investigation of pricing processes in companies. The PFH Private University of Göttingen has already presented an empirical pricing study in 2009, 2012, 2015 and 2018. The last survey is therefore now longer ago. The Corona pandemic, the war in Ukraine, the resulting supply shortages and the experience of unusually high inflation rates have placed completely new demands on the pricing of companies.

With this study, we want to look at the pricing processes of various companies of different sizes and from different sectors. We are interested in how prices are formed, the internal company attitudes towards pricing, the use of pricing tools, as well as successful implementation.

In addition, we would like to highlight potentials in the individual price design processes and show which remarkable approaches to pricing other companies can also apply.

Results of the Pricing Study

Let it be revealed at this point: many companies still underestimate the importance of strategic pricing. The strongest profit driver is and remains pricing, it therefore requires very high attention and professional pricing processes. This statement was already confirmed in the previous pricing studies 2009 (Riekhof/Lohaus), 2012 (Riekhof/Wurr), 2015 (Riekhof/Ha) and 2018 (Riekhof/Wille) and is now confirmed with the result of this pricing study (Riekhof/Breustedt).

Inflation pricing is something many companies still need to learn. Only a few managers have actually experienced times of relatively high inflation rates in their professional lives. And passing on the cost increases of raw materials to customers across the board is, in our opinion, not yet very intelligent inflation pricing.

One insight in advance: More than 50% of the respondents still see the importance of pricing as medium, low or very low. The surveyed companies have not yet created highly professional pricing processes in all areas. Pricing does not yet receive the necessary attention everywhere within the company.

The empirical view of pricing in companies confirms again that the pricing processes are not structured and controlled with the same care and intensity as is usual in other operational areas of a company. Logistical processes and processes of order processing and customer service are usually very precisely documented, and they are also measured with appropriate key figures. Given the value creation potential that lies in pricing, a comparable approach would be advisable.

To the Pricing Study 2023

Interview on the Pricing Study 2018

This is one side of the coin. What we also know from our empirical pricing studies: many managers do not take the trouble to develop a pricing strategy for their own company. This is surprising - after all, there is no bigger profit driver than the price.

In the run-up to the study, pricing expert Dr. Hans-Christian Riekhof conducted an interview with Sönke Scobel (photo), Analytics and Optimization Director at Stage Entertainment in Hamburg. This interview provides insightful insights into the pricing of the ‘Lion King’, one of the greatest successes in the history of musicals.

The pricing for the ‘Lion King’ is highly professional based on standardized analyses and a permanent learning process that systematically takes into account the insights from many years of practical price decisions.

To the interview

Publications on the topic of Pricing

Our recommendation

The Pricing Seminar with Prof. Riekhof

In this two-day intensive seminar of the Pricing expert Prof. Dr. Riekhof, the 4 levers for increasing the pricing competence of companies are conveyed. These levers are not only explained theoretically, but are applied using practical examples from the participants’ everyday work.

We recommend participants to bring specific pricing issues from their own work area into the seminar to work on them there.

What participants say:

“For me it was a huge realization: we don’t have a consistent pricing strategy yet.” Florian Fuchs, ZF Services

“My expectations were far exceeded.” Andreas Bauer, Neef and Stumme Premium Printing

“I have never attended such an effective seminar. I give it a straight 100 out of 100 points.“ Fritz Gerke Sales Representation

I never thought that Professor Riekhof’s experiences could be transferred so well to our business.“ Claus Benzler, MAN Trucks & Bus AG

MORE INFO ABOUT THE SEMINAR

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