Setting and realising optimal pricing

Challenge

One of the world’s largest producers of float glass asked R&G to help them improve their ability to set and realise optimal prices. Using big data techniques to conduct intensive analyses of all pricing data at transactional level, we were able to confirm the presence of a viable business opportunity to make a multi-million EBITDA impact.

The business is set up in a way which gives the various countries a high level of management autonomy. There was, therefore, a starting assumption that increased transparency across all the countries would be the key to gaining insights into pricing inconsistencies and enabling opportunities to surface. With the end goal of establishing better understanding of “what good pricing looks like”.

Our approach

Along the road to doing this, we discovered that the pricing process itself needed a significant upgrade. Some of the improvement areas identified were: the operating systems (pricing guidelines, levels of autonomy, escalation etc.), the provision of data insights to the sales force for faster/better decision making and connectivity to product management for the strategic/tactical positioning of the pricing guidelines.

Our implementation of a 5-workstream roadmap has set the programme team well on its way to installing the required technical changes. As a result, the pricing team is now able to define monthly pricing guidelines in a matter of hours instead of several days. Incentives for “good pricing” parameters have been adjusted, which has stimulated the desired behaviours. And while this project is still a work in progress the company has already achieved

Impact & Results

• connected bottom up (operational) and top down (strategic / tactical) price setting
• clear understanding of the drivers of price differences
• alignment of x-functional decision making teams
• clear accountabilities for discounting
• movement from passive market price recipients to active market price setting (via upcharges)