Strategic Pricing

More than just pricing

Price is one of the decisive factors when the market decides on an investment. Even so important that an incorrect price may cause the market to choose another product / solution even though its quality far exceeds its competitors as we all know, still so many companies are behind when it comes to Strategic Pricing.

“Even if you initially have set a correct price, the difference in revenue can be as much as 20-30% or more, just based on the structure in itself.”

The price is not a one-time deal to be forget after it is set. In addition to reflecting related costs, it is even more important that the price also takes into account the changing needs of the market, which has an overall effect.

Pricing is a crucial component that must correlate with the product’s net value, market needs, expectations and competition over the entire life cycle of product as well as including possible reinvestment’s. It also has a fundamental impact on Customers Experienced Quality. Incorrect pricing will therefore have a double negative effect as you lose both the expected benefit as well as creating a negative spiral, often unnoticed.

“It does not matter how skilled staff you have, how experienced they are, how good the product is or how good service you offer if the price does not reflect market needs, demands and conditions.”

It is unfortunately common among companies that they have incorrect pricing without being aware of it, since in lack of competence the wrongly done pricing strategy is interpreted as a correct one by, resulting in loss of revenue combined with targeting incorrect actions. A pricing strategy can be both static, flexible or a combination of both. The importance is the structured foundation that has to be based on the company’s overall strategic goals as well as a correct and thorough market analysis and know how.

Strategic Pricing is part of your Pricing Structure

Strategic Pricing is one of three important components when planning your basic Pricing Structure. Even though this particular example is best suited for B2B and more complex products/solutions, the principles can be adopted for any industry.

1. Basic Pricing
2. Strategic Pricing
3. Business Models

Planning your Strategic Pricing, must include all three steps in correct order, meaning you can not exclude the first step, Basic Pricing, before you plan your Strategic Pricing. When properly done, the structure can be adopted with built in flexibility often necessary when communicating and negotiating with fast moving market. One of the many benefits of a clear and well-thought-out structure and strategy, is that you both ensure continuous quality and image at the same time you as you have a stronger over all product/solution.

“A correct pricing structure and strategy make your business independent of few individual and ensures a high overall result within the group.”

A Pricing Structure may be more or less complex and they may differ widely from each other depending on product, solution and/or industry. But all businesses require a properly designed basic Pricing Structure based on the overall Strategy. 

If you have any questions or concerns, please contact us.



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Hit Rate % below 50 is not good enough

It’s often I can hear excuses for a low Hit Rate %, such as e.g. that the product is wrong, the market is too tough, it’s to few sales reps,  more marketing is needed etc.

A low Hit Rate is mostly based on your own performance

A Hit Rate should be high, over 50 % even if your product / solution not is the market-leading one. Hit Rate % is largely based on your ability to plan and work strategically towards the right market at the right time.

Here are five actions that significantly improve your Hit Rate:

  1. Target Groups – Define your Target Groups in detail, even if your company already has one.
  2. Value Propositions – Define net based value propositions for each Target Groups
  3. Business Model – Create a specific business model for each target Target Group
  4. Optimize communication – Plan the best way to communicate, event, meetings, lectures etc, and when
  5. Optimize Meetings – Plan your meetings in detail, when, how, with who, and don’t do anything with out a thought. Work tactically and let the customer close.

Take those specified actions and you will guaranteed improve your Hit Rate above 50 %.



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Strategic Product Packaging

Strategic Packaging is the way you choose to communicate your Product, (hardware, software, services, and / or solutions), toward a defined target market with the goal of maximizing and achieving optimal results while maintaining or improving confirmed customer-experienced quality

When talking about Packaging we usually think of physical packaging, even if packaging cover other areas as well. Strategic Product Packaging is the extension of all packaging, and is crucial in today’s fast moving markets. Strategic Product Packaging is How, When and to Whom you communicate your product In order to maximize your market position.

It’s a long time ago it only concerned Sales, and Marketing. In order to optimize your strategy it has to include the entire organization. We take it even further and include the customer and it’s experience. Being business minded is to include Strategic Product Packaging  as part of the on-going executive strategic process.

Part 1 – What is Strategic Packaging
2 – Goals, Segmentation and Defining the Product (December 20th)
Part 3 –
Business Models  and Mapping (End of December)
Part 4 –
Strategic Pricing (Method and Template)
Part 5 –
Communication Templates & Activity Planning

“Nespresso created a new product, where the customer can simply could prepare coffee with coffee capsules in a simple and trendy way. An example where Physical- and Strategic Product Packaging created a market leader based on an old product – coffee”

Define your target markets

75 % or more of all companies in the upper end segment do not properly define their market – loosing business where its easiest to get it

One of the most common mistakes that companies make, often based on incompetent is to focus on the wrong target groups, if any. With out knowing your Targets, then 50 % of your working hours or more will be wasted.

I have always done my own preparations, since the quality of the work are crucial. Defining targets is about the work you put in to the details. I usually spend 2 weeks a year doing this, but in return, it saves you lot of time rest of the year, as well as improving your results enormously.

  1. Product Capability – Find out the product’s/solutions capabilities before defining your Target Groups, making sure you are targeting the right once.
  2. Identify total market – Start to identify and divide the total market potential according to industry standards, with out limitation. Use for e.g. Business Organizations to get the information. Just order the information needed for this purpose, which usually lower the price per post you order. I do order an excel list myself or comma separated list to import it in a third part software/CRM. The information i gather can differ, but is usually based on; Number of employees, Business Area, Adress, State, revenue and EBITDA, owners.
  3. Identify Segments – Use your list and divide it in segments, (quantity). The market is due to industry standard usually divided in three (1) segments, (Low-, Mid- and Upper end Segment), based on number of employees. Low – 1-50 Full time Head Counts, Mid 51 – 250 Head Counts, Upper 250 or more.
  4. Identify target groups – Identify Target Groups defined by Business Area Standard Codes, (for e.g. named SNI groups in Sweden), such as IT, Finance, Medical etc. When done create a detailed excel or likely and divide all corporations/organizations based on Size, Revenue, Area, Business, etc. Don’t forget to notify if it is a subsidiary which will be important when planning your strategy.
  5. Identify potential needs – Based on your list and ranking, start Create a table and (a) identify expected demands/needs that your product / solution fulfills for each target group, and secondly (b) create new solutions/services that can fulfill needs you haven’t thought of before. I usually use a point system, giving for e.g. ten points for for each identified need per target group, making it easier to fine the ranking list when done. The once with most needs you can fulfill, should likely be more interesting for you to target.
  6. Identify expected competition – Identify the competitors you will meet at that specific target groups to be able improve your propositions.
  7. Rank the Target GroupsUse your list ranking your target groups in prioritized order. I usually start with an Excel Spread Sheet, and it’s easiest is to first make a rough ranking to later enter and change it in more detail. Things to consider doing the ranking is among others things:
    • Area (distance from you)
    • Size (biggest is not always the best in terms om leed time, needs, potential margins, competition etc).
    • Revenue
    • Last Investment done in a competitive solution if they have any
    • Most initial match due to your solution/product (initial need)
    • etc
  8. Create value PropositionKnowing what each target groups potentially needs/demands, the next step is to start planning a basic communication/marketing package for all those target groups, including your value points, a competitive business model as well as a strategic pricing included in the model for you to use in your communication, and start working with towards them.
  9. Prepare Marketing – Inform the marketing department in good time to create market packages / materials per target group.
  10. Strategy – Update your strategy to make sure you and your colleagues work in most efficient way. Decide how you will attract those groups in the best way. Arrange lectures, meetings, open house, guerilla events, or what ever you think is best. Go outside the box and always be very prepared and you will do great.

Once you have done it once, you will speed up next time, quite a lot. The step missing here is what is called product packaging and which in itself is both fun and important. This will be discussed in later sections. Product Packaging defines the basic product, add-on product, extended product, and value-added measures in a logical order. It works extremely well and it also requires the organization to understand why a price is communicated and why some parts can not be priced.

If you do all of this above, I guarantee that you will increase your Hit Rate % significantly, most certainly at least double it from last time. Then add Product Packaging, Strategic Meeting Planning, Strategic Business Models, tactical agreements and Strategic Pricing, and you’ll be the star.

Let me know if there is anything you would like to ask about,


Good Luck,



Regards Jonas



Tactical Agreements

Tactical agreements aim to give you and your business competitive advantages by designing the agreement / offer properly without changing the legal meaning. This is something very few work with which is a pity, because this has been helpful for me in almost every large deal i have signed over the years.
Tactical agreements include to remove all so-called obstacles, create conditions that suits the potential buyer, simply making the agreement’s design so advantageous that the agreement itself becomes a competitive factor. 
Tactical agreements are a quit broad area to discuss, but I would like you already here to understand the importance and the essence of Tactical Agreements. During my years, I have created different types of agreements based on the customer’s organizational structure, customer needs and our need to become more competitive. There may be agreements such as Central Agreement, Centrally Managed Local Agreements, Franchise, Contracts, Purchase Agreement, Rental / Leasing, Loan Agreement, Strategic Customer Agreement, Reference Agreements etc.

Whichever agreement you choose to use for the specific purpose, always plan your contractual strategy first. The purpose and goal is to make it as easy for the customer as possible to enter into an agreement/partnership with you as a supplier and to optimize the use of the agreement during the full life of the agreement.

A few basic points to consider with out going in to much details:

  1. Prepare different methods to finance the agreement/deliverance:
    1. Indirect financing, letting the franchises to finance through membership/monthly payments
    2. Renting / Leasing. Rental of services is deductible in the accounts in several countries, such as in Sweden about the service. Leasing /Renting is often added to operating budget, which some times doesn’t makes it easier to invest.
    3. Propose 30 years contract instead of usual 36 months? Provides a sense of security for the customer as you ensure that delivery is guaranteed for a long period of time. Add termination in 36 months, so the customer knows that they have everything to win. A good way to enter into long-term agreements that place demands on both.
    4. Probationary time?
    5. Use the tax or legal regulations to improve interest. For example. so some countries have the possibility of loss deduction without any limitation in time which is extremely powerful used correctly.

There are many more areas than just funding methods that are important. For example. the structure of the agreement itself, a So-called General Agreement or Standard Agreement makes it easier to approve, even if they are made with additions to it.

This is an extremely fun and exciting area where I usually teach more about tactics, agreement structures, funding methods, how to present and agreement etc. and I’ll get back a little later.

Result-oriented Marketing

Which activity gives the highest return?

I have for years, only met one person who actually knows how to work with a direct result-oriented marketing.

Everyone claims that they do, but yet nobody knows how to do it. Result-oriented Marketing means that you link your marketing activities to a realistic forecast and actual performance in advance. That you are skilled in your assessment so that you always optimize your activities to get better and better.

Use a marketing agency for creativity – not for results

It is in every company’s interest to be able to optimize the return per invested unit, yet it is in large no company that directly can link activities to a result, not even after the activity. Even worse, using a Marketing Agency can be great, when creating supporting materials for your market activities.  But in general, they don’t know anything about business.

I’ll be in a few weeks in a series review the basics of Performance-Oriented Marketing.


Regards Jonas


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