Stripping the guesswork from pricing

Lucas Skoczkowski
26 Jul 2011

The explosion in demand for data services has led to many well-documented consequences to the network and customer experience. It has also led to a revolution of pricing plans that sees service providers use them as a key way to differentiate rather than create price wars.

As we see a proliferation of new players to the market, increased pressure on margins, churn, and competition for high value customers, greater scrutiny is focused on how pricing plans are driving profitability for communication service providers.

Developing a profitable price plan now crosses multiple business units and is connected to myriad of internal demands.

Marketing is continuously designing new and more complex products while battling margin, product pricing and time to market pressures. Finance is under further pressure to contain margins, responding with demands for pre- and post-launch analysis of new services, in-depth analysis of margin per service, and trend analysis of usage and subscriber behavior per service offering. Large account sales teams are pushing to be able to attract new large customer accounts with value-driven price plans, and the Customer Care unit is desperate for better business intelligence data to develop anti-churn campaigns and offers.

All of those business units have become key stakeholders, each with specific needs and demands on how pricing plans are constructed. So how do pricing specialists balance the complex and sometimes contradictory requirements of all those stakeholders? To put it mildly, the success key performance indicators of a price plan have become increasingly complex to develop and evaluate.

To keep all those business units happy, pricing specialists need to provide solid answers to the following questions:

What is the expected adoption rate?

What is the profit margin?

How will it impact ARPU?

Will this reduce churn, and by how much?

Will it result in new subscriber add-ons?

What length of time should the promotion run?

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