Do I have options to price my services and/or goods? - Scott Geller

Scott Geller – The CFO Perspective

Episode: Do I have options to price my services and/or goods? 

Date: March 1, 2021

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INTRODUCTION
I have 20 years of experience in the finance realm that started with the Federal Reserve Bank as a bank examiner, moved on to 7 years at a Fortune 300 insurance company, and then a 50-70 person spin-off technology firm under the Allianz umbrella of companies. I was with the spin-off from day zero all the way until the unfortunate end and I had to close down the business. 

I am now a financial consultant serving primarily as a fractional or part time CFO for companies that range from start ups to young and scaling to established with stable growth. I take over from the accountant as a lean cost effective option for Profits Engineering, Cash Optimization, Strategic Acceleration and Executive Partnering committed to your success. Please contact me at scott.geller@capitisadvisors.com.

PROBLEM STATEMENT/SHOW OBJECTIVE
Pricing of a firm's offerings spans a vast chasm of variables, unknowns, levers, pressures, and other conditions to the point that a standard pricing practice or direction is an obtuse goal. However, leaders can and should absolutely take efforts to understand, impact, and constantly adjust their pricing whether it is products, services, or a combination of both. The practices or processes that are "standard" or uniform across industries are actions to assess and review not just pricing, but performance of products and services. Organizing your offerings, measuring performance, and taking action on the learnings in a continual cycle drives the essential unit of business which is progress. 

​WHAT YOU NEED TO KNOW

1. Know what you are selling and ever did sell
   1. Perform an audit
   2. All products and/or Services
2. Metrics & KPIs
   1. Leverage existing
   2. Determine needed
   3. Determine level of and rationale for Offer Performance
3. Know your pricing inputs
   1. COGS - Parts, LOE, Equipment,
   2. Support
   3. Warranty Periods
   4. Overhead Allocation
   5. Markup
4. Know or create a pricing strategy
   1. Mark-up
   2. Competitor driven
   3. Time and Material
   4. Volume vs. Luxury
   5. Fixed vs. Variable
   6. Value based
   7. SaaS
5. Measuring the results of your pricing
6. Goals
   1. Assess profitability
   2. Industry growth
   3. Market share
7. 4 Types of product and services
   1. Problem Child: High Industry Growth & Low Market Share needs to be closely monitored for marketing efforts;
   2. Star: High Industry Growth & High Market Share now and in the near future;
   3. Cash Cow: Low Industry Growth & High Market Share shows long term preference and loyal buyers;
   4. Dog: Low Industry Growth & Low Market Share means low customer preference and a candidate for upgrade or terminate.
8. Determine where each of your products and services are in the matrix.
   1. First Test: what is the average growth rate in your industry, your customer's industries growth rate.
   2. Second Test: how much share of the customers budget does your offer have today, what was it a year ago, what trend would you predict.
   3. Third Test: How much is your product or service making you in profits yesterday, today, and in the future?
   4. Fourth Test: Ask why you are selling even if you are selling to determine the true value to the customer

WHAT YOU NEED TO DO

1. Making the decisions for the products and services:
   1. Terminate to retire permanently or replace
   2. Adjust pricing
   3. Segment multiple products and/or services
   4. Remain the status quo
   5. Grave rob those that might be ready for market today
   6. Upgrade with new features, descriptions, marketing, etc
   7. New and fresh
2. Pricing is arrow in your quiver ... use all of your arrows
3. Build: Measure: Learn feedback loop
4. Build
   1. Offerings - Products and Services
5. Measure to test your fundamental business hypothesis
   1. Metrics, KPIs - making your product better and knowing why
   2. Profitability
6. Learn
   1. Make changes and track
   2. Disciplined approach
   3. Are past decisions or current decisions making the impact?
   4. A/B testing
7. Return to Build with changes with learnings ... Continue Learning

PREVIOUS : Episode 8 - 2021_02_22 - How does finance impact my strategic goals?
NEXT: Episode 10 - 2021_03_01 - How do I optimize my cash?


Resources:
You can connect with Scott via his website or LinkedIn
Connect on LinkedIn
See Scott’s Website

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