Pricing Project delivering £400k+ Business Performance Management Case Study

The Situation

The team had not looked systematically as their price – both the level and how it was structured for over a year. They did not document or monitor their product cost base, leaving them unsure of their gross margins.

The Business did not have a pricing strategy nor had it undertaken competitor benchmarking. This resulted in an increasing gap in pricing versus value provided to customers with the business losing potential profits.

The historical pricing approach had been ad-hoc which had led inconsistent approaches, cheaper pricing for smaller products compared to their larger versions and other anomalies.

The Purpose of the Project

Increase sales and profit and improve the structure of the pricing across all categories.

The Project

Emerson Nash worked closely with the client team to:

  • Create a pricing strategy
  • Create cost cards for each of their products to establish the exact cost of making
  • Create a pricing structure across categories and within each category
  • Undertake market analysis looking at what competitors were offering at which price points
  • Train the store managers as to why the prices where changing and how to deal with customer questions
  • Roll out the pricing changes in two separate periods / stages

The above steps were undertaken within four months initially, and then revisited for stage 2 several months later.

The outcome

The pricing increased delivered on increase of over £400k to Net Profit, net of volume drops due to the increased price. 

We provided a clear structure and model to reduce the time taken to set future pricing. This would also keep pricing consistent going forward, between categories and within each category and product size.

Increased the confidence of the client team and helped the market position of the their range of products.

Return on Investment

 

Value created

Return Multiple

Return over 1 year

£400,000+

Over 10 times

Return over 3 years

£1m+

Over 30 times

We measure the return on investment as the ratio of what value the client receives (price increase less volume drop) compared to their investment with us.

About the Business

  • This business makes and sells food products
  • They have £5m in sales, 50+ employees and is privately owned
  • They have six stores across central London 
  • They make their own products, fresh each day

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