Margin determination of an MRO provider mostly based on intuition
Unsystematic pricing decisions can lead to multiple missed business opportunities. This was preventing our client, a top Maintenance, Repair, and Operations (MRO) service provider within the Aerospace & Defense industry, from moving forward.
The MRO provider lacked structured processes for calculating offer-specific price premiums, with significant variations in cost and risk calculations. Furthermore, key account managers were relying on intuition to determine profit margins for their respective accounts.
Consistent costs, relevant price drivers, and value-based markups as project focus
We incorporated a consistent pricing approach, which allowed for the integration of relevant factors into the pricing decision. To create a systematic approach for future pricing decisions in tender procedures, it was essential to introduce a reliable calculation base. Our team achieved this by enabling consistent cost calculation and creating a realistic cost basis for all future considerations.
Next, we defined a minimum markup as a measure to avoid unprofitable projects. We assessed customer value, competition, and other internal aspects for company-specific markups and to derive a future target price.
Finally, our experts trained employees to use the new pricing tool, ensuring a seamless implementation into daily business processes and maximum usability.
New pricing and tendering solution to gain +2.5 percent ROS
We developed a tailored, value-based pricing model that provided systematic guidance during tender procedures and enabled price differentiation between deals. Additional decision support tools were implemented to facilitate a seamless adoption process, empowering sales to make performance-oriented, peer pricing decisions. The new solution was widely accepted within the company and led to a significant boost in sales revenue.
Our client also achieved successful knowledge transfer during the solution implementation by clearly defining roles and responsibilities and appointing a bidding and pricing manager.
