Cross-Industrial Pricing Workshop - Düsseldorf

Will you be joining us at The Renaissance Düsseldorf Hotel on 19 September 2013?  

Based on last year’s success, the EPP and DACH Chapter Board members have joined forces again this year to organise a new Cross-Industrial Pricing Workshop, this time in Düsseldorf! They say that the best ideas arrive from interdisciplinary intersections. Join us for this interactive discussion, in German, between peers from different industries in the DACH region and discover what can we learn from each other.

WHY JOIN?

Share experiences with a select group of 20-30 pricing professionals amongst others from companies such as Flowserve, Abbott Medical Optics, DER Touristik, Philips Healthcare, TUI Travel, Olympus Biotech, Nokia Siemens Networks, Swarovski, and discuss their approaches to common pricing issues.  This is the ideal opportunity to network with fellow pricers, and to build and strengthen the German-speaking pricing community.

KEYNOTE SPEAKERS

Mr. René Herzog
Bereichsleiter Kapazitäts- und Ertragsmanagement, DER Touristik GmbH

René has more than 11 years of experience in the Travel and Tourism industry, amongst others at TLU Airline, TUIfly, Hapag-Lloyd Express, TUI Deutschland and since the last 3 years as VP Capacity and Revenue Management at DER Touristik in Köln. His broad experience in this highly competitive industry is complimented by 3 valuable years at Roland Berger Strategy Consultants from 2007 until 2010.

Topic: Pricing in one of the most competitive industries in the world : Travel and Tourism

René Herzog will share the pricing challenges and the plans that he has devised together with his team at DER Touristik. He will reflect on what has worked an what hasn't.

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Dr. Marc Konieczny

Manager Cataract Sales, Abbott Medical Optics

Marc Konieczny has 13+ years of experience in Health Care, microbiology and biochemistry by background. He started his sales and marketing career in medical supply industry after his PhD (Natural Sciences) in 2000. Until 2003, he was product manager at Becton Dickinson (BD), Diagnostic Systems for Eastern Europe/Middle East/Africa (EMA). Until 2008 he took over increasing responsibilities in Marketing and Sales in EMA and Germany, Austria and Switzerland (DACH), respectively. In February 2008, he decided to leave BD for B.Braun Melsungen for development challenges in Marketing and Sales for Hospital Care (HC) division. Until 06/2013 he was acting as a Global Pricing Manager within HC Global Marketing and Sales working out of the B.Braun headquarter in Melsungen. Today, he is leading a management team for Abbott Medical Optics (AMO) focussing on Cataract Business in Germany.

Topic: How to drive a successful pricing initiative in the MedTech industry

Cuts in healthcare budgets, low-price competitors and increasing power of purchasing organizations increased the pressure of many medical device suppliers on their prices and margins. After having gone through a number of cost reduction measures, many companies become aware that pricing is a by far more effective lever for sustainable profitable growth.  Marc will discuss the five important rules that should be considered when leading a corporate and/or local pricing initiative(s) and working towards the desired increase in profit.

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Dr. Sandra Rothenberger
Chair of Strategic Marketing, Solvay Brussels School of Economics and Management

Dr. Sandra Rothenberger, specialised in pricing, consumer behaviour and strategic management, has recently become the new Chair of Strategic Marketing at the Solvay Brussels School of Economics and Management. She has extensive experience as research scientist on a broad range of pricing related topics, and has several publications in the field.

Topic: Sell value, not price – How to cure commoditized customers!

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Dr. Kai-Markus Mueller

Author of the book: "NeuroPricing – how customers think about prices", CEO and founder of The Neuromarketing Labs,

Kai has accumulated more than 10 years of experience in neuroscience research. Previously, he worked as a strategy consultant. Dr. Mueller obtained his PhD from the International Max-Planck Research School at the University of Tuebingen. He holds master’s degrees in both psychology as well as Neural and Behavioural Sciences from the International Max-Planck Research School. He conducted his entire dissertation research at a high-tech facility of the US government: The Laboratory of Neuropsychology at the National Institute of Mental Health in Bethesda, MD.

His recent book “NeuroPricing – how customers think about prices” has been published in German in fall of 2012. In 2013 the English version is going to be published.

Topic: NeuroPricing®: Setting prices that please the brain
Asking a person what they are willing to pay for a product assumes that this consumer has profound insights into his/her emotional state and future behavior. However, experimental psychology has shown over and over that questionnaires come along with biased results. In the large majority of pricing cases this fact leads to loss of profits or even failure of products in the market. The Neuromarketing Labs are the first research team worldwide that systematically developed an experimental design directly measuring perceived value and willingness-to-pay from EEG brain scan data (EEG = electroencephalogram, a scientific device to measure so-called “brain waves”). In his presentation, neuroscientist Dr. Kai-Markus Mueller will show that scientific EEG brain scans are able to predict consumer behavior in the field above and beyond explicit self-reports thus providing an invaluable tool to measure willingness-to-pay.


Learn which steps you can take to begin leveraging value in your pricing environment and gain insight into the positive impact that strategic pricing can have in your company.

The 2nd EPP DACH Chapter Workshop is made possible with the support of our sponsor, PROS. 

How to drive a successful pricing initiative in the MedTech industry (part 2)

Practitioner Point of View:

Marc Konieczny started his sales and marketing career in medical supply industry after his PhD (Natural Sciences) in 2000. Until 2003, he was product manager at Becton Dickinson (BD), Diagnostic Systems for Eastern Europe/Middle East/Africa (EMA). Until 2008 he took over increasing responsibilities in Marketing and Sales in EMA and Germany, Austria and Switzerland (DACH), respectively. In February 2008, he decided to leave BD for B.Braun Melsungen for development challenges in Marketing and Sales for Hospital Care (HC) division. Until 06/2013 he was Global Pricing Manager within HC Global Marketing and Sales. Today, he is leading the sales management team for Abbott Medical Optics (AMO) focussing on Cataract Business in Germany.




A couple of weeks ago Marc shared the 1st Rule of the game when planning to initiate and successfully drive a pricing initiative in the MedTech industry.  Today he sheds some light on his 2nd and 3rd rules.

Cuts in healthcare budgets, low-price competitors and increasing power of purchasing organizations increased the pressure of many medical device suppliers on their prices and margins. After having gone through a number of cost reduction measures, many companies become aware that pricing is a by far more effective lever for sustainable profitable growth.

In this series of five blog posts I like to highlight five important rules that should be considered when leading a corporate and/or local pricing initiative(s) and working towards the desired increase in profit.  Read rule number 1 here.

RULE No. 2: BUILD A STRONG COALITION OF LEADERS

• Take the time to get to know the stakeholders, as well as possible, e.g. you need to know what lives in the "heart of the battle". Be aware that mutual trust is the basis for good relationships, openness for change and real engagement. 
• Select only the best people for your project core team. Do not compromise and implement unpopular decisions fast. 
• Establish decentralized structures and delegate responsibility, e.g. one sub-project leader for each area of the price waterfall. 
• Take enough time for your internal network, national and international. Identify and build relationships to all positions and stakeholders that might be important for your success. 
• Top management support is absolutely essential for the project success. They need not only commit the necessary resources but also actively initiate and support the project further on, e.g. when entering new regions or country organizations. Detailing a project plan including concrete and company specific business cases on the basis of a first analysis will help to get them convinced and should be part of their active communication about the impact of pricing on profit and performance later on. Presentations at conferences or internal webcasts might be appropriate settings for this initial communication to the top management.
• Make sure that your sponsor and your boss are always 100% behind you.

 

RULE No. 3: DEVELOP A STRATEGY AND IMPLEMENTATION PLAN TOGETHER WITH YOUR TEAM AND COMMUNICATE WITH THEM AGAIN AND AGAIN

• The change process needs a clear direction. Build a custom-fit strategy for the implementation that does not only include targets but also components of behaviour. Integrate employees and key partners in this process and do not create a strategy in an ivory tower. Use different media and take all possible opportunities to communicate the strategy. This helps to ensure that employees identify with the new direction and a helps to avoid a bad implementation experience.
• Communicate important milestones of the project plan for the beginning. Realize short-term successes, communicate and celebrate them. 
• As example, when replacing a volume by a profitable growth strategy let your people work out different scenarios how to go forward, let them understand how they concretely impact their future success and income. Let them work out the argumentation details towards the customers so that the external communication is thought through and supported by all people. Communicate the status of the initiative constantly using established internal communication moments such as meetings and newsletters and collect feedback constantly thorough personal communication with the people. For internal reporting and feedback use established tools such as your CRM system and avoid reinventing the wheel.  There is no need to build up sophisticated new project-dedicated tools, if these exist already. 

Dr. Marc Konieczny is a speaker at the 2nd Annual DACH Chapter Workshop to be held in Düsseldorf on Thursday, 19 September.  The language of this workshop is German.  Register before 6 September t to benefit from the special rate of 195 Euro instead of 290 Euro.

Unlock the secrets behind Value Based Pricing

EPP endorses and speaks at the Syncron Pricing Seminar on 17th of October (Birmingham)

Learn which Pricing Methodologies to Utilize to Help Companies Win More Business for Spare Parts Pricing

Few companies take full advantage of the opportunity Spare Parts Pricing offers. The result: significant untapped profit potential! 

Whilst many companies will perform well in 2013, a select group will reach beyond normal limitations to outperform their peers.  Today, many manufacturers recognise that the key to improving margins and revenues is the implementation of a Global Price Management process.  These companies realise that widespread use of spreadsheets for analysing and managing prices is increasingly inadequate, and understand the strong need to break away from the constraints of cost plus pricing methods, and develop effective market based pricing.  This creates new possibilities for best in class companies to defend and increase their market share.

Price Optimisation capabilities allow improved insight and analysis into the price elasticity of captive aftermarket spare parts, and enables companies to better exploit and execute competitive pricing information through price-setting processes.

By attending this FREE half day seminar on the 17th October, you will learn which pricing strategies are important to utilize to help companies win more business!  Syncron will also share examples of how companies have successfully adapted their processes, and profited from Value Based Pricing for their Aftermarket Parts.

The Seminar covers:

• Identifying the principles for setting prices i.e. cost, or some other value driver;
• Benchmarking against competitor data to price parts;
• How to make sure you have all your necessary data available to undertake a pricing project;
• Segmenting parts pricing into different categories;
• Identifying which types of spare parts present the best opportunity for margin improvement;
• Finding the best method to correctly price unique/captive parts;
• Support and guidance for writing a business case when undertaking a pricing project.

This event is endorsed by the European Pricing Platform.

Pol Vanaerde, Founder and President of European Pricing Platform, will act as guest speaker at this event on the topic 'Economic Value Calculator'.

Registration is free, so we hope to welcome and meet you all on October 17th 2013 at the Ardencote Manor Hotel Country Club & Spa in Warwick (close to Birmingham Airport) !

Follow this link, or www.syncron.com, for more information and registration (navigation bar: about - events)

Why it is NOT a good idea to buy Swiss Chocolate in Germany

Today we welcome Dr. Mark Friesen, board member of the European Pricing Platform (EPP) in Germany, Austria and Switzerland, as guest blogger to The European Pricing Blog. With his company QUINTA Consulting, he advises medium-sized companies in B2C and B2B projects in marketing and pricing. After studying business administration in Oestrich-Winkel, Madrid and Chicago, he received his Ph.D. on price fairness at the University of St. Gallen. Subsequently, he worked in various management positions at Deutsche Lufthansa AG in Frankfurt and Brussels. Prior to his consulting work, he spent three years as Head of Pricing at the APCOA car Parking Holdings GmbH. He is also a lecturer in economics and pricing at the University of St. Gallen and the Lucerne University of Applied Sciences and Arts.

The strong Swiss frank has made shopping for all kind of products in Switzerland a quite expensive enterprise. Compared to retail prices in neighbouring countries like Germany Swiss prices always tend to be higher due higher purchasing power and willingness to pay of Swiss consumers. However, a recent study of QUINTA Consulting shows that retail prices for milk chocolate are surprisingly higher in Germany than in Switzerland. Despite the unfavorable exchange rate the study indicates that four of six chocolate brands are more expensive in Germany.

To make international price management a success the study suggests three pricing principles:

1. use of price discrimination and versioning for exclusive Swiss retail products to create additional customer value, 
2. application of psychological means of price promotion and transparency to help customers to perceive Swiss retail prices differently, and 
3. to communicate retail price changes to the Swiss consumer as fairly and early as possible.

The original post follows bellow in German:

Warum es sich nicht lohnt, Schweizer Schokolade in Deutschland zu kaufen 

Ein Beitrag zum internationalen Preismanagement zwischen Preisparität und Kundenwert

source: http://bit.ly/1dsYwaB

Der Wechselkurs zwischen dem Euro und dem Schweizer Franken führt seit mehr als zwei Jahren dazu, dass viele deutsche, aber auch Schweizer Produkte in der Schweiz deutlich teurer sind als in den angrenzenden Nachbarländern der Schweiz. Der durch die Entwicklung des Wechselkurses bedingte „Einkaufstourismus“ Schweizer Konsumenten im benachbarten Ausland (sowie in ausländischen Online-Shops) soll sich laut einer Studie der GfK Schweiz im letzten Jahr auf über 5 Mrd. Schweizer Franken belaufen haben. Insbesondere Bekleidung und Schuhe, Nahrungs- und Kosmetikartikel sowie Möbel und Einrichtungsgegenstände standen ganz oben auf den Einkaufszetteln Schweizer Konsumenten. Mehr als die Hälfte dieser Auslandseinkäufe entfällt dabei auf Deutschland.

Haupttreiber dieses Einkaufstourismus ist zweifelsfrei der starke Schweizer Franken, welcher sich seit Einführung einer Kursuntergrenze von 1,20 Franken pro Euro im September 2011 relativ stabil in einem Preisband von CHF 1,20 bis CHF 1,26 für 1 Euro bewegt. Internationales Preismanagement agiert stets im Spannungsfeld von sich täglich ändernder Devisenkursen. Verkaufspreise deswegen an internationale Wechselkursschwankungen zu koppeln, kann aus Marketingsicht keine wirklich sinnvolle Lösung sein. Dennoch lassen sich nicht alle Preisunterschiede nur mit dem aus Schweizer Konsumentensicht ungünstigen Wechselkurs begründen.

Der Grund für internationale Preisdisparität liegt oftmals ganz woanders. Denn auch Händler, Zwischenhändler oder Spediteure wollen bezahlt werden, wenn z. B. eine deutsche Schokoladentafel beim Coop in der Schweiz verkauft werden soll. Nicht selten sind auch unterschiedliche Verpackungsgrößen im Spiel, die einen direkten Preisvergleich erschweren. Zudem liegt das letzte Wort über den Verkaufspreis beim Handel. Bedingt durch hohe Reallöhne ist die Schweiz seit jeher ein Land mit hoher Zahlungsbereitschaft und hohem Preisniveau. Nicht umsonst spricht die Schweizer Presse bereits von einer „Hochpreisinsel Schweiz“. Bestes Beispiel hierfür sind Zeitungen oder Zeitschriften: das in Deutschland verlegte „manager magazin“ kostet in Deutschland 8,50 €, in der Schweiz CHF 14,50, also umgerechnet 11,79 € und somit 39 % mehr.

Vor diesem Hintergrund stellt sich die Frage, welche Gründe über reine Kosten- und Preisniveauunterschiede hinaus überhaupt noch für unterschiedliche Preise für das gleiche Produkt in zwei verschiedenen Ländern sprechen. Preisparität ist selten das Ziel, denn ein aktives, internationales Preismanagement hat stets das gesamte strategische Preisdreieck aus Kosten, Wettbewerbsintensität und Kundenwert im Auge. Letzerer drückt sich in der Zahlungsbereitschaft aus: der Preis sollte die Wert- und Nutzendimensionen eines Produkts aus Kundensicht möglichst genau widerspiegeln. Höhere Preise in der Schweiz sind also zunächst einmal nicht verwerflich, sondern auch Ausdruck eines höher wahrgenommenen Kundennutzens für ein Produkt.

Wie verhält es sich dann mit den Preisen für eines der „Ur-Schweizerischsten“ Produkte überhaupt, nämlich der „Schoggi“ oder der Schokolade? Hierzu hat QUINTA Consulting eine Studie durchgeführt, die zu einem äußerst überraschenden Ergebnis kommt.

Tabelle: Detailhandelspreise 100 g Schokoladentafel Vollmilch in Deutschland und der Schweiz

Quelle: Quinta Consulting, 2013

Eigene Recherche am 01.05.13 in Frankfurt a. M. und 03.05.13 in Pfäffikon (SZ)

* Wechselkurs: CHF 1,23 / €

Entgegen allgemeiner Vermutungen und einer Vielzahl an Beispiele aus anderen Produktkategorien ist Schokolade aus Schweizer und - mit einer Ausnahme - auch aus deutscher Herstellung in der Schweiz nicht etwa teurer als in Deutschland, sondern günstiger. Lediglich die beiden 100 g Vollmilchschokoladentafeln von Lindt & Sprüngli und Ritter Sport sind in Deutschland günstiger; alle anderen der sechs von QUINTA Consulting untersuchten Schokoladenmarken sind im deutschen Einzelhandel teurer. Selbst Kinderschokolade von Ferrero kostet in der Schweiz umgerechnet weniger als in Deutschland. Milka von Mondelez wird erst gar nicht im Schweizer Detailhandel angeboten.

Wie kann das angehen? Sind deutsche und Schweizer Schokoladen-Hersteller oder der Schweizer Detailhandel auf einmal der beste Freund des Schweizer Konsumenten und wollen ihm die Strapazen des Einkaufstourismus ersparen oder versteckt sich mehr dahinter? Die Erfahrung zeigt, dass diejenigen Unternehmen am erfolgreichsten bei der Durchsetzung höherer Preise sind, die bestimmte Grundsätze des internationalen Preismanagements beherzigen. Hersteller wie Handel können von der Umsetzung der drei folgenden Leitlinien gleichermaßen profitieren:

1. Produktdifferenzierung und -versionierung

Verschiedene Produkte oder Produktmerkmale nimmt jeder Kunde unterschiedlich wahr, da ihm diese einen anderen Nutzen stiften. Auf den Schokoladenmarkt übertragen, könnte dies beispielsweise bedeuten, Schokoladensorten eigens für den Schweizer Markt zu kreieren, welche Kunden einen relevanten „Mehrwert“ bieten, der wiederum mit einer erhöhten Zahlungsbereitschaft goutiert wird. Zusätzliche Angebote wie Treueboni, Kundenclubs oder Online-Gewinnspiele, exklusiv nur für eine Schweizer Community, sind weitere Möglichkeiten, „Added Value“ zu schaffen. Unterschiedliche Kundensegmente gemäß ihrer Zahlungsbereitschaft anzusprechen, ist auch das erklärte Ziel der sog. „Versionierung“ von Produkten. Nicht nur für Schokoladenhersteller, die ihre Ware in der Schweiz verkaufen wollen, bedeutet dies, unterschiedlich ausgestattete Produktlinien einer Dachmarke anzubieten, welche den differenzierten Ansprüchen der Verbraucher gerecht werden. Packungsgröße, Gewicht, Format oder Zustand sind nur einige von vielen Versionierungsmöglichkeiten für eine 100 g Tafel Vollmilchschokolade, die helfen können, eine Preisprämie auf dem Schweizer Markt durchzusetzen.

2. Preisdarstellung und -transparenz

Hersteller von Schokolade wie von anderen Produkten sollten über ihr Händlernetzwerk versuchen, an den direkt steuerbaren Parametern der Preiswahrnehmung Schweizer Konsumenten anzusetzen: dem Verkaufspreis, anderen Preisinformationen (z. B. auf Vergleichsportalen im Internet) sowie der Preisdarstellung. Letztere wird auch als „Framing“ bezeichnet und beschreibt Best Practices des für den Kunden wahrnehmbaren internationalen Preismanagements: Preiserhöhungen in kleinen Schritten vorzunehmen oder auf übermäßigen Gebrauch von Preisaktionen zu verzichten. Ebenso gilt es als vorteilhafter, Preisanhebung so zu terminieren, dass externe Gründe für eine Preiserhöhung verantwortlich gemacht werden können, wie z. B. gestiegene Rohstoffpreise für Kakao. Alle Preiserhöhungen, die nicht kosteninduziert sind, werden aus Verbrauchersicht als Angriff auf den Kundenwert empfunden. Wechselkursanstiege gehören nicht unbedingt dazu, da diese temporärer Natur sind. Dennoch sollten Unternehmen, die in der Schweiz mit ihren Produkten vertreten sind, eine Preisstrategie mit Regeln für den Umgang mit übermäßigen Wechselkursschwankungen zur Hand haben. Zyklizität der Devisenkurse gehört im internationalen Preismanagement zum Geschäft und Aktionismus ist hierbei fehl am Platz. Stattdessen sind größtmögliche Transparenz und Nachvollziehbarkeit bei den Verkaufspreisen anzustreben: insbesondere Preisanstiege sind in den Augen von Kunden glaubhafter, wenn sie verständlich und einfach dargestellt, ohne versteckte Zusatzkosten versehen und in ihrer Kalkulation offen gelegt sind.

3. Preiskommunikation und -fairness

Höhere Preise für wohlmöglich identische Produkte durchzusetzen, bedingt immer auch eine nachvollziehbare Kommunikation zwischen Verkäufer und Käufer. Bei ausreichend differenzierten Produkten ist es einfacher, einen höheren Preis über den Mehrwert für den Kunden zu kommunizieren. Das Thema der Preisdisparität gegenüber Schweizer Konsumenten nicht anzusprechen oder gar vollkommen zu verschweigen, ist die denkbar schlechteste Strategie. Denn bereits Seiders/Berry (1989) haben erkannt: „No fairness effort will work without communication.” Preiserhöhungen sollten daher langfristig und - wenn möglich - mit dem Verweis auf extern gestiegene Kosten, z. B. für Kakao, angekündigt werden. Die Konsumenten haben so die Möglichkeit, sich frühzeitig an die Preisanpassung zu „gewöhnen“.

Alle drei vorgestellten Maßnahmenpakete des internationalen Preismanagements können Herstellern wie Handel helfen, die Preisparitätsfalle zu durchbrechen und höhere Preise in der Schweiz durchzusetzen. Für alle anderen soll es eine Anregung sein, über die Betonung des Kundenwerts Schweizer Konsumenten wieder für Schweizer Produkte in der Schweiz zu begeistern. Denn das Beispiel Schokolade hat gezeigt, dass es sich nicht lohnt, Schweizer „Schoggi“ in Deutschland zu kaufen.


Literaturhinweise:
Diller, H. (2007): Preispolitik, 4. Auflage, Stuttgart.

GfK Switzerland (2013): Auslandseinkäufe erreichen ein Volumen von fast 9 Milliarden Franken, http://www.gfk.ch/imperia/md/content/iha-gfk/pressemitteilungen/2013.04.05._gfk_auslandeink__ufe_pressetext_deutsch.pdf, abgerufen am 14.06.2013.

Tages-Anzeiger (2012): Deutsche naschen Schweizer Schoggi zum Schnäppchenpreis, http://www.tagesanzeiger.ch/wirtschaft/konjunktur/Deutsche-naschen-Schweizer-Schoggi-zum-Schnaeppchenpreis/story/23167542, abgerufen am 14.06.2013.

Roll, O. et al. (Hrsg.) (2012): Praxishandbuch Preismanagement: Strategien – Management – Lösungen, Weinheim.

Simon, H./Fassnacht, M. (2009): Preismanagement: Strategie - Analyse - Entscheidung - Umsetzung, 3. Auflage, Wiesbaden.

Thinking twice about price

We came across a very interesting article shared by Tim Smith on LinkedIn.  At EPP we are just rounding off our pricing maturity study at the moment, analysing where EU companies are when it comes to pricing. Results coming soon, very interesting insights...  In the meantime, here is the article posted originally in the Economist on 27 July 2013.

In an age of austerity businesses need to get better at charging more...

WHEN bosses promise to make their companies more profitable they usually say they will do so by increasing sales or cutting costs. But a third road to profits is rarely mentioned: putting prices up. Managers often fail to ask how they might do better at plucking the goose to obtain the most feathers with the least hissing. The spiel from the management consultants who advise companies on pricing—whether specialists like Simon-Kucher or giant generalists like PWC—is that it is now more vital than ever to be smart at it. In today’s austere age many businesses cannot depend on rising sales volumes to lift their profits. As for cutting costs, most have already pared them to the bone. Prices are all that is left. And a business can do a lot with clever pricing, to boost its share of the limited spending-power that is out there.

Makers of high-tech products such as smartphones can opt to add whizzy new features and push up prices. In the case of luxury goods, their exclusivity is a large part of their appeal, and this in turn is a function of their price, so firms usually have scope for limiting supply and charging more: Ferrari, a sports-car maker, and Mulberry, a purveyor of posh bags, have both recently signalled that they plan to do just that. But raising prices by making products better or more exclusive is a strategic decision, open to only a few types of business. For all sorts of mundane goods and services there is much that can be done tactically, the consultants say, to charge more for the same thing.

First, firms should simply take pricing more seriously: have a clear policy and make everyone stick to it. Obvious? At a recent conference organised by Simon-Kucher, the 100 or so delegates were asked to put their hands up if their company had a written pricing policy. Just two did so. Setting prices, promotions and discounts is often left to junior people and local sales offices. Even where a policy is set from the top, the salespeople may ignore it because they are still being rewarded for maximising sales and keeping customers. Neil Hampson, a pricing expert at PWC, says he sometimes starts his client meetings by asking: “When was the last time you congratulated a salesman for walking away from a client?” Most have never done so.

Second, companies need to remember that, as the late Peter Drucker, a management guru, once put it, customers do not buy products, they buy the benefits that these products and their suppliers offer to them. So, businesses that fail to identify what benefits they are offering each type of customer are likely to be undercharging some of them. Equipment-makers who sell to other businesses can be especially prone to a “cost-plus” mentality, in which they charge the same margin to everyone instead of identifying those that are less price-sensitive and finding ways to earn more from them. Oil companies, for example, can suffer huge costs in lost drilling time if a pump goes down, so pump-makers could charge them a premium for guaranteed same-day dispatch of spares.

Airlines have learned to “unbundle” their product, charging separately for baggage and meals and increasing their overall takings. But industrial suppliers may still charge the same to customers who never call their technical helpline as to those who ring it daily. Makers of everything from aircraft engines to lorry tyres have gone further in selling benefits rather than products, by offering “power by the hour” contracts in which customers only pay when they use their goods. The suppliers earn more overall, while their customers preserve scarce capital.

A third route to charging more is to manage customers’ expectations better. In the early 2000s executives at General Motors were told to wear badges with “29” on their lapels, as part of a disastrous plan to get back to a 29% market share in America. This merely reinforced car-buyers’ assumption that GM would offer them whatever discounts it took to shift its metal off the forecourts, putting the firm on the road to bankruptcy. (Last year its market share fell to 17.5%, its lowest since the 1920s.) Once customers know that a firm’s price list is a work of fiction and that it will resort to discounts as soon as sales dip, it will be a long haul to get them used to paying full price, let alone accepting increases. Simon-Kucher’s consultants praise DHL, a logistics firm, which spent years drilling into its customers that whatever the economic conditions there will be a rate rise each year.

You’ve been framed

Fourth, there are lots of simple presentational tricks that almost everyone is wise to but which still, miraculously, work. Restaurants add some overpriced wines lower down the menu to make the ones at the top seem reasonable. Makers of ice cream offer “33% extra free” rather than “25% off” the cost of the regular size, even though these are arithmetically the same thing. Buyers at big industrial firms are just as susceptible to such “framing” when reviewing a list of widget prices.

The pricing experts make it sound so easy. But there are of course limits to how far firms can go in tailoring their prices to the customer without appearing sneaky. Last year Orbitz, an online travel agency, was criticised for offering a costlier selection of hotels to people browsing its site on an Apple Mac because it assumed they were richer than PC users. Although a firm’s customers may not notice the odd price rise slipped in here and there, they will eventually notice if their overall bill starts to swell: Tesco, Britain’s biggest grocer, is now having to offer expensive discounts to win back a damaged reputation for value.

And sticking to a pricing strategy takes guts. The irony, confides a senior management consultant, is that firms like his have such a taboo against letting go of a client that they are the worst at taking their own advice to be fearless in asking for more, and walking away if they do not get it.