Transforming Pricing Strategy to Accelerate Growth for PE-Backed Automotive Diagnostics Leader
Industry: Automotive Technology - Private equity-backed OEM-grade diagnostics solutions provider
Challenge: Pricing strategy optimisation and business model transformation
Solution: Pricing analytics, financial modelling, strategic reporting
Technology: MY SQL, Excel
Situation and Challenge
A private equity-backed automotive technology company, serving customers across 120 countries, sought to optimise its pricing strategy to drive growth and profitability. The client faced complexities arising from rapid market expansion, diverse sales channels, and an expanding product portfolio. The legacy pricing model had become unwieldy, necessitating a simplified approach to product pricing and service packaging to capitalise on market expansion and innovations.
Insight and Action
Our approach encompassed:
- Collaborating with the CFO to develop a new pricing strategy, transitioning from a traditional license and maintenance model to a subscription-based SaaS model.
- Constructing a comprehensive business planning model for analysis, reporting, and decision support.
- Developing a robust financial and portfolio pricing model to evaluate diverse go-to-market strategies, fees, and transactions.
- Implementing price elasticity calculations and cannibalisation risk analysis for new product introductions.
- Engaging closely with business teams to define parameters, boundaries, and correlations between decision variables and business performance.
Our intervention yielded significant outcomes:
– Provided strategic guidance to the executive team for evaluating go-to-market strategies for new products.
– Applied customer value modelling to optimise product bundling and promotional offers, enhancing revenue and product loyalty.
– Quantified the impact of operating model changes, including sales incentives and partner compensations.
– Facilitated expansion into 3 new countries and deprecation of a legacy product.
– Enabled launch of a new support service offering.
– Aligned implementation plan with senior management and PE board expectations.
Key Achievements:
– Steered transition to SaaS pricing model, providing strategic insights for pricing decisions and go-to-market strategies.
– Conducted pricing analytics and customer value modelling, identifying revenue opportunities through optimised bundling and promotions.
– Reviewed commercial operating model, analysing implications of changes to distribution strategies and compensation structures.
– Developed risk mitigation and change management playbooks to address product cannibalisation and price implementation challenges.
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