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Strategic Transaction Pricing and Cost Management Guide

Develop unit prices for products or services by defining units, analyzing market factors, considering cost bases, investment risks, and key decision drivers to drive profitability and market share. Plan strategies and adjust quickly in evolving environments.

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Strategic Transaction Pricing and Cost Management Guide

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  1. TRANSACTION PRICING December 11, 2002

  2. Transaction Pricing Developing unit prices for individual products or services

  3. Pricing Considerations • Define unit of service or product • Understand the market • Customers • Competitors • Product/Service Life Cycle • Volume Potential • Barriers to Entry

  4. Pricing Considerations

  5. Pricing Considerations - Cost Base • Fixed versus variable costs • How quickly fixed costs can be avoided • Individual product/service variable costs (if producing or rendering more than one) • Marginal and incremental costs • Target volumes and break-even points • Sensitivity analysis on volume levels (market share) • Capital investment • Working Capital requirements

  6. Pricing Considerations

  7. Investment Risk • Achieving target volumes • Competitor reactions • Risk mitigation strategies • Cost variability • Sharing risk and rewards with suppliers/partners

  8. Go Forward Strategy • Plan strategy before entry • Position product/service as evironment changes • Quickly adjust as competitiors’ react and customer values change

  9. Key Decision Drivers • Willingness to Pay • Our Advantage • Winning price • Break-even, Profit • Fixed,Variable • Return on Investment • Drive market share • Customers • Competition • Market Price • Volume • Costs • Investment • Strategy

  10. eds.com Mary Bundy 613-787-4630 mary.bundy@eds.com

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