Project: Price Benchmarking and Strategy

Challenge

Our customer, a leading firewall vendor, needed to evaluate its pricing competitiveness to ensure that new products were well positioned. The price shouldn’t be too low as this may lead to a poor perception of the product and lower revenues. But the price couldn’t be too high as the company didn’t have all of the value-added features of some of its peers. The challenge our customer faced was to understand the price the end-user actually paid once multi-year and channel discounts were applied.

Solution

WA proposed benchmarking competitor price competitiveness across 5 common customer use-cases. This helped eliminate the challenge of comparing highly differentiated products with varying specifications by selecting the solution that would best address the customer requirement. The evaluation considered 4 competitors.

WA initially selected the most relevant competitor products for each use-case and selected 1,3 and 5 year contract periods to evaluate pricing variation by contract length. WA reviewed pricing lists from each company and following intensive research, built a model that applied discounting assumptions to the list prices.

Outcome

The project highlighted that the old pricing was too high when comparing like for like services. However, it also confirmed that assumptions regarding the new pricing strategy were correct and provided management with the confidence to launch the new pricing strategy internally, gaining support from the sales team, and externally with channel partners. Company sales performance the following financial year increased by 11% following a period of flat sales.