A simple framework for building a pricing model.

1. A Simple Framework for a
Pricing Model
George Sloane MBA, MS

2. What is the Right Price?
• Too High
– Make Margin, Lose Volume = Not Optimum
• Too Low
– Lose Margin, Excess Volume = Not Optimum
• Just Right
– Solid Margin, Solid Volume = Optimum
(Optimum is Profit and Market Share Gain Balance)

3. Pricing Approaches
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Accounting– Cost Plus
Marketing– Premium
Competitive Matching
Economic Supply and Demand
Something Else?

4. Solution: A Hybrid Model
• Hybrid (Multi-Factor)
– Internal Factors
• Accounting/Finance Dept.
• Marketing Dept.
• Management
– External Factors
• Customers
• Competition
• Micro/Macro Economics

5. Pricing Model
(A Simple Framework)
Historical Time Series Analysis
• Seasonal Supply/Demand Trends
• Actual v. Projected Results
• Statistical Pricing Analysis
Advance Orders Analysis
Economic Analysis
• Actual Advance Orders
• Macroeconomic
• Forecasted Orders
• Microeconomic
• Odd Event (Internal/External)
• Industry Trends
Cost/Expense & B-E Analysis
• Fixed Costs
Other Variables
Pricing Strategy
• Variable Costs
• Known
• Ad Hoc
• Break-Even Point
Management Estimates
Competitive Analysis
Customer Analysis/ Ranking
• Senior Management
• Capacity (Current and Planned)
• Segment A
• Operating Managers
• Pricing
• Segment B
• Dept. Managers
• Substitutes
• Other Segment

6. How to Do It?
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Identify the Team
Gather Information
Organize Information
Perform Analysis
Make a Decision
Test and Adjust
Repeat Process

7. Model Applications
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Product(s)
Service(s)
Tangibles
Intangibles

8. For More Information:
• Need Help? Contact George Sloane:
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Email: gsloane.business@gmail.com
Website: AnalyticsDesignGuy.com
Twitter: @TheRealGSloane
Linked In: http://www.linkedin.com/pub/george-sloane/49/720/94a
Google+:
https://plus.google.com/106321626989410967132#1063216269894109
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– Facebook: https://www.facebook.com/george.sloane.56

9. Thank You.
A Simple Framework for a Pricing Model
Copyright George Sloane All Rights Reserved

10. Thank You.
A Simple Framework for a Pricing Model
Copyright George Sloane All Rights Reserved