Harnessing the power of pricing analytics
Pricing analytics can reduce risk, boost sales, and increase margins – even in the face of market disruption. In fact, with effective pricing, enterprises can often improve profit margins by at least 0.5–1%. So, what does this look like in practice?
One aviation leader identified a $30 million margin gap against target. The company had previously set prices for its spare parts without considering the connections between prices, buyers, and perceived value. Working with Genpact, the company found that its customers would make buying decisions based on how they use, consume, and replace different parts. This formed the basis for the company's decision to map part pricing against perceived customer value. With this approach, the company formalized a pricing strategy, created trackable pricing lists, and developed a dynamic pricing model that resulted in a $60 million margin improvement.
Similarly, an oil field services provider didn't have a standard list of prices for its products, rentals, and services. This led to disparity across customer quotes and negative perceptions about the company's pricing. Genpact helped the company build machine learning-based algorithms to generate standardized prices according to region and product. Supported by advanced visualization dashboards, the company improved profit margins by 2–3%.