EquipmentCo. was preparing to launch a strategic product which could fundamentally transform the way the current product line was thought and configured in the industry. The company wanted to keep the price of the new product in the same range as the existing product to encourage adoption. To accomplish this, EquipmentCo. sought to identify the pricing range of its existing product suite in different geographies.
EquipmentCo. onboarded SCG’s on-demand workforce to identify the price range for its innovative new product. SCG's agile workforce conducted a benchmark study on a similar existing product from EquipmentCo.’s existing product portfolio and their sales prices in key geographies. Finally, EquipmentCo. was provided with an excel based tool with programmed parameters to output price ranges for the new product based on its configuration and geography.
The key project objectives were:
The current product line was made up of multiple hardware components, EquipmentCo.’s new innovative product was a compact, software based product with minimal add-on paraphernalia. EquipmentCo. now wanted to understand the pricing rationale for the new product, since none of the current products would be the right comparable benchmark. Additionally, the complexity in the situation was higher as each current product line had multiple capability versions and was sold at a different price point in different geographies.
SCG conducted a three-phase project to help EquipmentCo. identify a rationale for pricing the new product:
Phase 1 – Price range of hardware in the selected geographies
SCG’s on-demand workforce initiated the project by segmenting the existing product suite into its components namely hardware and software. During this phase, it was also focused on the hardware components and the capability each component provided to the overall product. Based on this the team then used historical transactions to create scatter plots of sales price of the hardware in various product configurations in each market.
Phase 2 – Price range of software in the selected geographies
During this phase SCG's agile workforce focused on segmenting the software bundles and repeated the same process for each geography. Historical transactions were used to create scatter plots between software units sold and sale prices to identify the price range of top 3-5 software bundles/licenses with the highest volume/price sold. Also, insights were derived regarding the price perception of softwares in each geographic area. Finally, SCG's agile workforce was able to identify which product configuration was using which product bundles at what price.
Phase 3 – Develop a price range tool
After identifying the price range of existing product components an excel-based tool was built. This excel tool enabled EquipmentCo. to predict the price range of the new product, based on identified parameters with allotted weightage for each individual component. This allowed EquipmentCo. to select a country and specific configuration and derive the price range. Additionally, it allowed additions of any new country data into the tool and derive the price range for that country.
SCG’s on-demand workforce provided EquipmentCo. with a functional tool. The tool is now in use by the pricing and the sales team to estimate the price range of the new product in multiple geographies. This project solved a key management challenge.
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