ValueBased Pricing Business Aspects By Homi R Mullan
Value-Based Pricing & Business Aspects By: Homi R. Mullan Welcome to the Talk On. . . “Value-Based Pricing & Its Related Business Aspects” YEP-1 Enterprise Workshop June 14, 2006 Organizer WZCC-India Mumbai Homi Mullan 1
Value-Based Pricing & Business Aspects By: Homi R. Mullan Homi Mullan’s Background & Related Experiences. . . YEP-1 Enterprise Workshop June 14, 2006 Organizer 1. Technical Marketing & Sales 2. Specialist in Energy & Environment Conservation 3. Technical Writer 4. Trainer 5. And much more WZCC-India Mumbai Homi Mullan 2
Value-Based Pricing & Business Aspects By: Homi R. Mullan Homi Mullan’s Choice in the formative years. . . Make a Choice between YEP-1 Enterprise Workshop June 14, 2006 Organizer 1 x 10 Or 10 x 10 WZCC-India Mumbai Homi Mullan 3
Value-Based Pricing & Business Aspects By: Homi R. Mullan Specialisation Experiences 1963 to 1978. . . U. K. based YEP-1 Enterprise Workshop June 14, 2006 Organizer 1. Steam, Compressed Air 2. Instrument- Process & Lab 3. Instrument- Electro medical 4. Fabrication – Pipeline 5. Boilers & Oil Burners 6. Pollution Monitor: Water & Air WZCC-India Mumbai Homi Mullan 4
Value-Based Pricing & Business Aspects By: Homi R. Mullan Specialisation Experiences 1978 to 1988. . . U. S. A. based YEP-1 Enterprise Workshop June 14, 2006 Organizer 7. Conductive Polymer Heating 8. Radiation Cross-Link Polymers: - L. V & H. V Elect. Insulation. - Corrosion Protection - Wire & Cables WZCC-India Mumbai Homi Mullan 5
Value-Based Pricing & Business Aspects By: Homi R. Mullan Specialisation Learned & Experiences Gained at … YEP-1 Enterprise Workshop June 14, 2006 Organizer The University of CUSTOMERS WZCC-India Mumbai Homi Mullan 6
Value-Based Pricing & Business Aspects By: Homi R. Mullan Lessons from the Experiences … YEP-1 Enterprise Workshop June 14, 2006 Organizer A. Have PASSION & BELIEF B. SPECIALISE in the Subject and Market place. C. Keep EXPANDING in Different Fields. D. Beware on Choosing FUTURISTIC Product or Businesses WZCC-India Mumbai Homi Mullan 7
Value-Based Pricing & Business Aspects By: Homi R. Mullan First Experience on Value Based Pricing. Heat Tracing (1979) -ves YEP-1 Enterprise Workshop June 14, 2006 Organizer WZCC-India Mumbai STEAM AUTO-TRACE Availability Indigenous Imported Cost Rs. 30/mtr ? SAFE ? ¼ 4 X Very Wide New in India Haz. Area Safety Energy Cost Usage Homi Mullan 8
Value-Based Pricing & Business Aspects By: Homi R. Mullan First Experience on Value Based Pricing. Heat Tracing (1979) +ves STEAM AUTO-TRACE 8 to 15% 90% + TIC Existing 1 - 2 1 TOC 7 X – 12 X 1 Life 10 Yrs 20 – 40 Yrs 10% of TIC/yr 2% 3 – 4 X 1 Efficiency YEP-1 Enterprise Workshop June 14, 2006 Organizer Maintenance WZCC-India Mumbai Installation Time Homi Mullan 9
Value-Based Pricing & Business Aspects By: Homi R. Mullan Auto-Trace Values Sold YEP-1 Enterprise Workshop June 14, 2006 Organizer WZCC-India Mumbai DEPARTMENT VALUES Project Time Saving Process Reliability Maintenance Free Easy to Modify Finance Net Worth Savings Management Assurance Homi Mullan 10
Value-Based Pricing & Business Aspects By: Homi R. Mullan Value Based Pricing Determined AUTO-TRACE YEP-1 Rs. 700/mtr Enterprise Workshop June 14, 2006 To Rs. 1500/mtr Organizer (Steam Tracing Originally Perceived at Rs. 30/mtr) WZCC-India Mumbai Homi Mullan 11
Value-Based Pricing & Business Aspects By: Homi R. Mullan Value Plus v/s Cost Plus Value Plus Co. Cost Plus Co. YEP-1 Sale Cost 100 20 100 60 Enterprise Workshop June 14, 2006 Gross Margin OPEX 80 20 40 20 Organizer Gross Profit Interest 60 15 20 15 PBDT 45 5 WZCC-India Mumbai Homi Mullan 12
Value-Based Pricing & Business Aspects By: Homi R. Mullan Small Firms Faster Growing YEP-1 Enterprise Workshop June 14, 2006 Organizer � Differentiated Product or Service � Innovativeness � Service � Overall Quality Slower Growing �tandard Product or S Service Price � Credit Facility � Lower Survival � Prospects Weaker Growth � Prospects WZCC-India Mumbai Homi Mullan 13
Value-Based Pricing & Business Aspects By: Homi R. Mullan Differentiation • To be unique in the Industry along some dimensions that are widely valued by the Customer YEP-1 Enterprise Workshop June 14, 2006 Organizer WZCC-India Mumbai • To be unique and different • When differentiation cannot be sustained, USP becomes less important • If the premium charged is too high, Customers may decide not to purchase OR it invites competition Homi Mullan 14
Value-Based Pricing & Business Aspects By: Homi R. Mullan Elements of Differentiation Strategy • Reinforce differential advantage • Build brand image YEP-1 Enterprise Workshop June 14, 2006 Organizer WZCC-India Mumbai • Build on specialist skills • Respond aggressively to competitors or new entrants • Invest in barriers to entry • Monitor changes in market Homi Mullan 15
Value-Based Pricing & Business Aspects By: Homi R. Mullan Cost Plus Pricing YEP-1 Enterprise Workshop June 14, 2006 Organizer COST LEADERSHIP CANNOT BE SUSTAINED WZCC-India Mumbai Homi Mullan 16
Value-Based Pricing & Business Aspects By: Homi R. Mullan Niche Strategy YEP-1 Enterprise Workshop June 14, 2006 Organizer The key to the segmentation is the ability to identify the unique benefits that a product or service offers to potential customers WZCC-India Mumbai Homi Mullan 17
Value-Based Pricing & Business Aspects By: Homi R. Mullan Focused Differentiation • Is to pursue Niche Strategy • Very attractive for smaller firms YEP-1 Enterprise Workshop June 14, 2006 Organizer WZCC-India Mumbai • Risk is that it can be imitated • Successful companies follow a strategy of Differentiation • Family company differentiating its products, sells to a small but lucrative market segment Homi Mullan 18
Value-Based Pricing & Business Invention Reinvent. Aspects & Scientists Upgrade By: Homi R. Mullan Marketing, R&D Patents Legal Reuse & Rename Marketing, R&D Product R&D Engineers Liability Management Legal, marketing, board Safety Qualification Engineers YEP-1 Technical. Enterprise Economic Workshop June 14, Study 2006 Market & finance Organizer WZCC-India Mumbai Manufacture Engineers Technology Service Engineers Field Installation technicians Best Price Marketing & Finance Homi Mullan 19
Value-Based Pricing & Business Aspects By: Homi R. Mullan BOILED FROG SYNDROME YEP-1 Enterprise Workshop June 14, 2006 Organizer WZCC-India Mumbai JUMPS IN BOILING WATER SITS IN COLD WATER, PUT TO BOIL JUMPS OUT INSTANTLY SITS UNTIL IT IS BOILED, AND DIES Homi Mullan 20
Value-Based Pricing & Business Aspects By: Homi R. Mullan Thank You FOR YOUR PATIENT LISTENING YEP-1 Enterprise Workshop June 14, 2006 Organizer WZCC-India Mumbai Homi Mullan 21
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