Soft Inc. had seen its market share of its leading product declining over the last three (3) years. Although there has been many customer complaints about how the product is priced, the company ignore the signs until its largest customer threatened to move to the competition.
The current pricing strategy was a single approach whereby customers will often buy more than they needed.
Approach
Vaxa deaggregated the current pricing policies to determine its strengths and weaknesses. This provided a base of facts on which to build a new pricing strategy.
Researched pricing models from similar and dissimilar industries that provided a list of pricing options to consider.
Interviewed existing customers to capture their issues and gather input for consideration when designing a new pricing model.
Built a pricing model that incorporated issues such as segmented customer needs, impact on future revenues and margins, and the level of difficulty to implement.
Outcome
The new pricing strategy incorporates several models since there was no one pricing strategy that meet the customer needs.
The roll out will need to be implemented by region and not necessarily by customer segment.
At best, the client new pricing will be seen as reactive vs. picking up early on customer trends for alternatives.
The current pricing information system will need to be updated to incorporate the changes in the pricing model.
Client Results
Over the initial 12 month period after roll out, the client started to regain its lost market share but it is estimated that it will take at least twenty-four months to get back to its original market position.
The new pricing strategy allowed the client to track the pricing preference by customer segment. It was previously thought there was no difference in preference.
The new pricing strategy attracted customers from the small & medium business customer segment - previously, the product was mainly purchased by large corporations.
