In-plants Must Use Competitive Pricing Strategies

Howie Fenton

As he has for many years now, Consultant Howie Fenton gave a very informative keynote at the recent IPMA conference. This time, however, he did it in a new role, as vice president of consulting at IMG.

In a presentation titled "New Strategies to Increase Your In-plant's Performance and Value," Fenton discussed the importance of having an up-to-date understanding of your costs and employing innovative pricing strategies. Pricing, he admitted, is often a controversial subject for in-plants, because customers are very price sensitive.

"If you shift your pricing strategy correctly, it will not hurt customer satisfaction but actually improve it," he insisted. Fenton described four pricing strategies:

1. Cost plus
2. Competitive pricing
3. Value-added pricing
4. Enhancing the customer experience

Quoting from research he did last year in his previous position with InfoTrends, Fenton observed that leading in-plants are moving from cost plus pricing strategies to competitive pricing strategies. This, he said, has been confirmed in a new research project he is working on with IDC, which is sponsored by NPES/PRIMIR and is scheduled to be released later this year.

Fenton noted that only about half of the in-plants surveyed have up-to-date costs. He argued that before considering any pricing strategy, in-plants need to update their manufacturing costs.

Fenton also discussed the importance of measuring and benchmarking financial and operational performance.

"The challenge, however, in trying to use traditional benchmarks is that different types of in-plants have much different financial performance," he said. "For example, the benchmarks for universities are much different than those for transactional printers."

Read IPG's full report on the IPMA conference in our August issue.