Pricing Strategy Consulting | L.E.K. Consulting

Pricing is a deceptively simple but particularly challenging opportunity to realize. What, for example, is the trade-off between price and the other value attributes of a product or service? And how do you measure elasticity without the interference of noise from other factors that influence demand, such as competitor promotions or discounts? Getting pricing right really matters to the profitability of a business, as it can be the single biggest driver of sales and margin.

While optimizing price is important to all businesses, every industry and company, whether B2B or B2C, has a unique answer to how to arrive at an optimal pricing structure and level. And it doesn’t matter if what’s being sold is software or soft drinks — pricing is also closely tied to product strategy, as it requires deciding how many different variants of a product should be sold as well as how they should be priced to maximize total profit.

L.E.K. Consulting believes that pricing decisions cannot be made in a vacuum; they must be centered on the needs (and behaviors) of customers and how well the products being sold meet those needs. That means an industry-specific, customer-led approach to pricing that is tied to strategy, product, marketing, sales and finance and builds organizational buy-in, from the C-suite to front-line sales.

When L.E.K. helps clients with pricing, we use a combined team to bring an intimate knowledge of industry dynamics and the target customer gained through our extensive commercial and strategy work and a deep pricing toolkit with expertise that draws on best practices from within that industry and beyond.

We can be an end-to-end partner, or we can provide support for specific needs, starting with pricing diagnostics to understand the opportunity through all aspects of pricing strategy and ultimately to supporting execution, change management and operating model evolution. Our only imperative in working with you is to use pricing to grow your total profit pool and increase the long-term value of your customers.

Discover more about our pricing work by industry:

How we help

L.E.K.’s Pricing & Revenue Optimization practice works with clients across three phases: Diagnostic, Strategy and Enablement

We can help you develop and execute pricing strategies across a range of different industries and contexts. That includes pricing to consumers/customers, to retailers and more, and doing so in particular channels and value chains. We do this by establishing the links between pricing and the attributes valued by different strategic segments. As part of this process, we can:

Clarify the market and competitive dynamics that affect pricing decisions
Determine which attributes of a product or service deliver value
Ascertain what goes into the cost of a product or service to ensure that price structures deliver the required levels of profit contribution
Model the effect of a given price on profit and/or volume
Identify improvements in the way prices are set and delivered to the marketplace
Compose a process for consistently enforcing pricing policies
Create processes, governance and incentives to focus the sales force on contract and account profitability
Match pricing with the value that the customer expects to receive
Uncover causes of margin leakage by analyzing historical sales data at the transaction level
Link pricing strategy to product portfolio management
Develop integrated pricing strategies across channels
Design analytical tools to sustain improved pricing capabilities for the long term
Support the implementation of a pricing program

Your benefits

A clearly defined pricing architecture and, where applicable, approach to yield and/or revenue management
Greater understanding of the value attributes that should be communicated to each customer segment
Optimized margins or market share
Improved profit and volume predictability
Greater insight into transaction, customer, segment and channel profitability

Contact us for more on how L.E.K. can help you use pricing to improve your profits and customer lifetime value.