Custom Game
Most B2B suppliers play the Custom Game by negotiating discounted deals with individual customers amidst heavy competition. They price to competition because the market lacks large customer segments, common price structures, and standard product configurations.
It is critical to tightly control discretionary discounting and ensure that the sales force and the customers feel that the pricing process is fair. Your path to growth depends on:
- Establishing a target pricing formula: This usually involves anchoring on the underlying interrelationship between price and deal volume (the Natural Volume Slope) and using specific market adjusters.
- Tracking sales discretion: The difference between net prices and target prices can reveal valuable information on market trends and sales performance.
- Incentivizing the sales force on revenue and price discretion: This keeps sales focused on “revenue quality” instead of primarily on margins or volume.
One key to resilience in the Custom Game is the ability to use surcharges to offset externally driven cost shocks that affect the entire market, not just you.
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Video on the Custom Game — April 29, 2024
BCG’s Cesar Torres explains the rules and relationships necessary to play the Custom Game in the latest installment of the Game Changer Expert Interview Series. In this video, Torres describes the nature of the Custom Game, what forces drive pricing, and how players can gain competitive advantage. To learn more about strategic pricing and the new book from BCG’s Pricing Practice.
My colleague Cesar Torres recently sat down and described the Custom Game, one of the Seven Pricing Games. Watch the full interview here to discover how your business can apply these principles to thrive in a competitive market. Don’t forget to like, comment, and share your thoughts.
Game changing pricing strategies — April 22, 2024
Amidst increasing pricing challenges and uncertain times, CEOs are prioritizing strategic pricing. However, strategic decisions on offers, pricing units, mechanisms, and models must precede any pricing decisions. I am excited to speak with Stephan Liozu at an insightful webinar titled, “A Conversation on Game Changing Pricing Strategy.” This webinar explores how to navigate pricing strategies in today’s world and how your company can win the Seven Pricing Games.
Moving from Custom Game to Choice Game — April 1, 2024
Shifting from the Custom Game to the Choice Game means creating packages of products and services that can help businesses avoid commoditization and embrace the new, while offering simpler, more attractive options to customers. BCG’s Lionnel Bourgouin explains the rules. To learn more about strategic pricing and the new book from BCG’s pricing practice.
Don’t miss my colleague Lionnel Bourgouin‘s Game Changer Expert Interview where he discusses how companies can transition from playing the Custom Game to the Choice Game. Learn more in his interview below.
Reporting Lines for Pricing Function — March 28, 2024
Very interesting post from Stephan Liozu leveraging PPS data. Marketing going down and Product Management going up fits my experience. Over the past 15 years, companies have connected pricing decisions to product line-up decisions. In particular, this is true for all firms with high innovation rates that have added software elements to their line-up. It is pretty clear with GenAI that companies need to design their products with the pricing in mind and vice versa. Business Units going up is another welcomed trend; they are closer to markets with hopefully a more strategic long-term perspective. Thanks for sharing Stephan.
Monetization – Value-based Pricing – Pricing Strategy – Sustainability – stephanliozu.com 1mo
Please REPOST – Every year Professional Pricing Society conducts a survey of the . It is extremely valuable for the profession. I have put together this graph to show the evolution of the reporting lines for the pricing function in organizations over the years. As you can see, pricing reports less into #marketing and more into the business unit and Senior Management. Please comment on this chart and I will compile a list of impressions, comments, analysis, and opinions. And please take the survey in the future!
Tim J Smith Mark Stiving, Ph.D. Utpal Dholakia Dr. Gerald Smith Kevin Mitchell Johnny Haskins Jr. MBA, MCTS, MCITP Andres Reiner Jean-Manuel Izaret (JMI) Joel Hazan Mitchell Lee Michel Safi Steven Forth Craig Zawada Gabe Smith Frederico Zornig Andreas Hinterhuber Rafi Mohammed Christopher Provines, MBA Thorsten Lips Danilo Zatta, PhD, MBA