Why Conduct Pricing Due Diligence
Pricing is a powerful lever to increase business value. Through pricing due diligence, we identify actionable, tangible ways to improve pricing capabilities and mitigate pricing-related risks. Our insights help businesses discover untapped opportunities to drive their financial performance, and they help investors make more informed investment decisions.
Our Approach to Pricing Due Diligence
● We follow our comprehensive, proprietary framework for pricing capability assessment, which has been highly praised by marketing legend Philip Kotler. The framework focuses on increasing Pricing Power to build shareholder value, and it ensures that we evaluate pricing capabilities in a full, comprehensive manner. Accordingly, we examine a wide range of avenues to foster profitable growth through price management, and our focus is not limited to merely identifying immediate opportunities for increasing prices and plugging price leaks.
● Our team has experience not just with due diligence, but also with execution. We describe pricing improvement opportunities not just conceptually, but also address their real-life feasibility.
● With over a decade of Private Equity experience, we understand how you operate, and how to partner with your team to generate results. We work with investors and management teams in a relatively unobtrusive manner.
● We provide an objective third party perspective, often challenging how target management thinks about pricing in their business.
Due Diligence Focus Areas
We derive insights from fact-based expert analysis. We review information from data rooms, interviews and other available sources. We examine areas such as the following, while tailoring efforts to align with project-specific objectives:
● Market position: What is the target's value proposition? What is its competitive positioning?
● Pricing analytics and controls: How does the target set prices for its offerings? Are targeted price points actually invoiced? Are there leaks (inadequately controlled discounts, etc.) that could be better managed?
● Foundational pricing capabilities: Is the pricing area properly resourced (IT systems, human resources, etc.)? Are there established and effective pricing processes? Is leadership appropriately involved in price management?
Due Diligence Report Structures
Our Due Diligence reports summarize our findings. They present an organized view of short and long term pricing-related risks and opportunities.
Opportunities may include updates to offer configurations (including possibly applicable
Pricing-related risks are also uncovered in various areas. They may include a lack of agility/flexibility in price management (due to ERP limitations, contractual obligations preventing price changes, etc.), competitive pricing threats, or excessive customer concentration, among others.