Move guide
Learn what customers value and competitors charge
Your report suggested a move on at least one of these four practices:
- how well customer value is understood;
- what is known about competitors' pricing;
- whether competitor prices are recorded over time;
- whether customers' view of your price and value is measured.
Price debates often run on opinion about the customer and guesses about the competitor. This move guide gathers evidence on both. Strategy, structure and price moves all build on it.
If you took the consumer check, go to the consumer section. If your products reach shoppers through retailers, go to the section for brands.
1. When it applies
Use this move guide if your report placed any of these four practices in the lowest two stages.
| Practice | Where it may sit today | Where this move guide aims |
|---|---|---|
| How well customer value is understood | Lagging: "Nobody has asked customers what our product is worth to them; prices are justified by our costs." Basic: "We know which customers complain about price, but not which ones would pay more." |
Competent: "For major segments we can name the customer's next-best alternative and what we offer beyond it." |
| What is known about competitors' pricing | Lagging: "Competitor prices are heard about from customers, usually during a negotiation you are losing." Basic: "Someone checks competitor list prices occasionally; their discounts, structures and costs are a mystery." |
Competent: "Competitor prices are scanned on a schedule, and their price structures are broadly understood." |
| Whether competitor prices are recorded over time, published and actually paid | Lagging: "Competitor prices live in salespeople's heads and are quoted from memory when a deal is lost." Basic: "Competitor list prices are looked up when needed, and nothing is written down that anyone could find a year later." |
Competent: "Competitor list prices for a defined set of products are logged on a calendar, so movements over time can be seen." |
| Whether customers' view of our price position and value is measured over time | Lagging: "What customers think of our prices is whatever the last complaint said." Basic: "A customer survey once asked about price; nobody can find the result or say what has changed since." |
Competent: "Customers' view of our price position and value is measured on a schedule for key segments, and the result is reported." |
If all four already sit at the middle stage or higher, skip this move guide.
2. What to do
Six steps. They take six to eight weeks. Start the interviews on day one.
- Choose 15 to 20 customers to interview. Spread them across segments and regions. Include small customers and ones you have lost to a competitor.
- Test the interview guide twice. Try it on three colleagues, then on three friendly customers.
- Run the interviews. Ask what they buy, from whom and on what terms. Ask what minimum, standard and excellent service look like. Then ask: if standard costs 100, what are minimum and excellent worth?
- Write down each segment's next-best alternative. The alternative is what the customer would buy if you were gone. Write what you offer beyond it, in dollars where you can. Table A below does this.
- Start the competitor price file. Log list prices for your twenty most-contested products each month. Add what customers say they paid when you lost a deal or a tender. Take prices from customers, tenders and published lists. Never take them from a competitor, or from an industry survey of future prices.
- Ask your top thirty customers two questions twice a year. How do our prices compare? Are we worth it? Keep the answers as a series.
The four free worksheets do the recording:
- /worksheets/pricing-b2b/value-understanding for the interview and the value table;
- /worksheets/pricing-b2b/competitor-intelligence for the competitor file and their price structures;
- /worksheets/pricing-b2b/competitor-price-record for the monthly log and lost-deal prices;
- /worksheets/pricing-b2b/customer-price-perception for the two questions.
The value calculator works out what your offer is worth to a customer, against their next-best alternative.
3. What to produce
One table, plus the four worksheets above.
Table A. The evidence page, one row per segment
| Segment | Next-best alternative | What we offer beyond it | Worth to the customer ($ a year) | Competitor price movement this quarter | "How do our prices compare?" | "Are we worth it?" |
|---|---|---|---|---|---|---|
Bring this page to every price review. Choosing segments and writing the strategy starts from it.
4. A worked example
Illustrative. Written for this move guide. It describes no client.
A supplier of commercial cleaning products sells to hospitals, hotels and contract cleaners.
The interviews.
- The pricing owner and the sales director interviewed 18 customers over four weeks. Four of them had moved some business to a competitor in the last year.
- Hospitals named a national supplier as their next-best alternative. They valued next-day delivery and the infection-control paperwork that came with each product.
- Hotels named a cheaper local brand. They valued the on-site training for new housekeeping staff.
- Contract cleaners saw little difference between suppliers and bought on price.
The value.
- A hospital buyer put the paperwork alone at a day of staff time a month.
- The hotels' training was worth less than the price gap to the local brand for small hotels, and more for large ones.
The competitor file.
- Twenty contested products were logged monthly from published price lists.
- Lost-deal prices came from the customers who had moved.
Three months on.
- Each segment had its next-best alternative and the value of the difference written down.
- The competitor file had three months of entries, and the top thirty customers had answered the two questions once.
On a retake, all four practices could be answered at the middle stage.
What it looked like in our work
From our own work. Ratings simplified.
A building materials maker interviewed customers in four segments about what they needed from a supplier. Each segment had its own pattern.
| Need | Distributors | Builders | Project contractors | Large retailers |
|---|---|---|---|---|
| A relationship with the supplier | Medium | Medium | High | High |
| Promotions to help them sell | Low | High | Low | High |
| A wide product range | High | Low | Medium | Low |
| Help with projects | Low | Low | High | Low |
| Short lead times | Medium | High | Medium | High |
| Delivery in full | Medium | High | Medium | Medium |
| Payment terms | High | High | High | High |
| Flexible order sizes | High | Low | High | Medium |
Builders and large retailers wanted promotions. Project contractors wanted help with projects. Distributors wanted range. One offer for all four would have given some segments more than they valued, and others less.
Priced high where buyers were most sensitive
From our own work. Figures changed.
An agricultural equipment maker measured how sensitive buyers were to price for each of its lines, then set each group's prices against its rivals'. The prices ran the wrong way round.
- 4% below Category A: lines where buyers were not sensitive to price
- 6% above Category A: lines where buyers were sensitive to price
- 1% below Category B: lines where buyers were not sensitive to price
- 4% above Category B: lines where buyers were sensitive to price
| Category | Share of lines where buyers were sensitive to price (%) | Their average price against rivals | Lines where buyers were not sensitive: average price against rivals |
|---|---|---|---|
| A | 60 | 6% above | 4% below |
| B | 55 | 4% above | 1% below |
The business was cheapest where price mattered least, and dearest where it mattered most. Before you move these prices, check the competitor prices behind them. For many lines there were none.
A customer value map
Illustrative. The customer value map is Bradley Gale's.
A value map places each supplier by the benefit customers see in it and the price they see. Along the line from the bottom left to the top right, price matches benefit. A supplier above the line offers more value than its price, and tends to win share. One below it tends to lose share.
| Point | Price, as customers see it | Benefit, as customers see it |
|---|---|---|
| You | 3.4 | 5.6 |
| Rival A | 7.2 | 7.4 |
| Rival B | 4.9 | 4.8 |
| Rival C | 2.1 | 2 |
| Rival D | 6.5 | 4.1 |
- Price matches benefit: from 0.8, 0.8 to 9.2, 9.2
- Value advantage: gains share
- Value disadvantage: loses share
Price matches benefit along the dashed line. Above it, customers get more than they pay for.
Three things make a map worth drawing:
- the benefits customers weigh, in their own order: product, delivery, range, support;
- the segments and channels that weigh them differently, each with its own map;
- how customers see you and each rival, on benefit and on price.
Each side of the line has its own move. Above it, there is room to raise the price toward the line. Below it, add the benefits customers value, discount only where you must, and cut the benefits that cost more than customers will pay for.
5. Effort and dependencies
- Pricing ownerLeads.
- Senior peopleRun the interviews, with sales alongside.
- Finance analystKeeps the competitor file.
What you need
- A customer list by segment and region, with recent wins and losses.
- Published competitor price lists, and the lost-deal and tender records.
How long
- Six to eight weeks. About twenty interviews fit into three to four weeks.
- Then the competitor file monthly, and the two questions twice a year.
What gets in the way. We have seen these in our own work:
- A friendly sample. Our own process notes found that sales management puts forward its good customers. Sample every region, and ask for the mix you need.
- Too little time with the customer. The same notes say an hour of a customer's time is hard to get. Do not leave a questionnaire behind, because it can be passed around.
- A value case written from inside. Customers pay for lead time, reliability and service when you make them explicit. You only learn which by asking.
6. How will you know it worked?
The test is whether price reviews use the evidence. Retake the check after the first round of interviews and three months of the competitor file. Each of these should be true when you answer:
| Practice | You can answer Competent when | A document alone does not count if |
|---|---|---|
| How well customer value is understood | Each major segment has its next-best alternative and what you offer beyond it written down, from interviews with customers. | The value case was written inside the business, with no customer asked. |
| What is known about competitors' pricing | Competitor prices are scanned on a schedule, and their price structures are written down. | The file was started once and has not been updated. |
| Whether competitor prices are recorded over time, published and actually paid | List prices for a set of contested products are logged on a calendar, so you can see how they moved. | Prices are looked up for one review and not kept. |
| Whether customers' view of our price position and value is measured over time | Key segments are asked about price and value on a schedule, and the answers are reported. | The questions were asked once. |
For consumer businesses
This section is for the B2C Consumer Pricing Health Check. Here the evidence is what shoppers would pay, a basket of competitor prices, and two survey questions.
When it applies
Use it if your report placed any of these three practices in the lowest two stages.
| Practice | Where it may sit today | Where this move guide aims |
|---|---|---|
| How willingness to pay is understood | Lagging: "Price changes are debated on opinion; the customer's side of the argument is guessed." Basic: "We watch competitor prices but have never measured what our own customers would pay." |
Competent: "Willingness to pay has been researched for key products or segments within the last two years." |
| Whether competitor prices are recorded over time, shelf and actually paid | Lagging: "Competitor prices are a screenshot someone took when a customer complained." Basic: "Competitor prices are checked before our own changes and never kept, so nobody can say what they did last year." |
Competent: "A defined basket of competitor prices is logged on a schedule, so movements over time are visible." |
| Whether customers' view of our price position and value is measured over time | Lagging: "Price image is assumed from footfall; nobody has asked customers how our prices compare." Basic: "A survey once asked about price; the result was noted and never repeated." |
Competent: "Price perception and value for money are measured on a schedule for key customer groups, and the result is reported." |
What to do
- Estimate what customers would pay for your ten biggest products. Start from your own sales history. Add a short price question to research for your key customer groups.
- Log a basket of fifty competitor prices every week. Record shelf and promoted prices, and give the log an owner.
- Add two questions to the customer survey you already run. How do our prices compare? Are we good value? Each quarter, plot the answers against the real price gap from the basket.
The three free worksheets do the recording:
- /worksheets/pricing-b2c-direct/wtp-understanding for the price questions by customer group;
- /worksheets/pricing-b2c-direct/competitor-price-record for the basket and the weekly log;
- /worksheets/pricing-b2c-direct/customer-price-perception for the two questions and the plot.
What to produce
Table B. The evidence page, one row per product group
| Product group | What key customers would pay | Our price | Basket price, main competitor | Gap (%) | "How do our prices compare?" | "Are we good value?" |
|---|---|---|---|---|---|---|
A worked example
Illustrative. Written for this move guide. It describes no client.
An outdoor gear retailer sells through 20 stores and a website.
- Sales history and a short survey question showed shoppers would pay more for its own-brand jackets than it charged.
- The weekly basket of fifty prices showed its main competitor was cheaper on tents, by more than the price gap shoppers believed.
- Shoppers said the retailer was dearer overall, while the basket showed it was level on most lines.
- Each quarter's plot set the shoppers' view beside the real gap.
On a retake, all three practices could be answered at the middle stage.
Effort and dependencies
- Who. The pricing owner leads. Marketing runs the survey questions. An analyst keeps the basket.
- What you need. Two to three years of sales history, and a survey you already run.
- How long. Six to eight weeks for the first round. Then the basket weekly and the questions quarterly.
- What gets in the way. A basket that changes every week. Fix the fifty products, and change them only on purpose.
How will you know it worked?
| Practice | You can answer Competent when | A document alone does not count if |
|---|---|---|
| How willingness to pay is understood | You have researched what customers would pay for your key products or customer groups in the last two years. | The research is older than two years. |
| Whether competitor prices are recorded over time, shelf and actually paid | A fixed basket of competitor prices is logged on a schedule, and you can see how it moved. | Prices are checked before your own changes and not kept. |
| Whether customers' view of our price position and value is measured over time | Price perception and value for money are measured on a schedule for key customer groups, and reported. | The questions were asked once. |
For brands selling through retailers
This section is for the B2C via trade Brand Pricing Health Check. A brand needs evidence for two audiences: what it is worth to each retailer, and how shoppers see its price against competitors and own-brand.
When it applies
Use it if your report placed any of these three practices in the lowest two stages.
| Practice | Where it may sit today | Where this move guide aims |
|---|---|---|
| Whether we can show each retailer what we are worth to them | Lagging: "Our case to the buyer is the relationship and the rate we are willing to pay." Basic: "We can quote our market share and our advertising spend." |
Competent: "For each major account we can show rate of sale, return per shelf metre and the category growth we bring, against competitors." |
| Whether competitor shelf and promoted prices are recorded over time | Lagging: "Competitor shelf prices are what a rep mentioned, and nothing is kept." Basic: "Competitor prices are collected before a range review and thrown away after it." |
Competent: "Competitor shelf prices for the category's key items are logged on a schedule by channel, so movements over time are visible." |
| Whether shoppers' and retailers' view of our price position and value is measured over time | Lagging: "What shoppers think of our price is whatever the buyer said in the last negotiation." Basic: "Brand tracking asks about price occasionally, and nobody connects it to pricing decisions." |
Competent: "Shopper price perception and value for money for the brand are measured on a schedule, and the result is reported." |
What to do
- Build a value story for your biggest account, in their numbers. Show rate of sale, return per shelf metre and the category growth you bring, against competitors. Table C below does this.
- Take it to the next meeting before the buyer asks for anything.
- Pick the twenty items that set the category's price points. Log competitor shelf prices for them monthly, by channel. Take the prices from the shelf and from scan data. Never take them from a competitor.
- Add promoted price and depth from scan data as you go.
- Put two questions in the brand tracker: how does our price compare, and are we worth it? Ask your top five buyers the same two at each terms round, and keep the answers as a series.
The three free worksheets do the recording:
- /worksheets/pricing-consumer-trade/retailer-value-story for the value story;
- /worksheets/pricing-consumer-trade/competitor-price-record for the twenty items and the monthly log;
- /worksheets/pricing-consumer-trade/customer-price-perception for the two questions.
What to produce
Table C. The value story, one account
| Measure | Our brand | Main competitor | Own-brand | Category |
|---|---|---|---|---|
| Rate of sale (units per store per week) | ||||
| Return per shelf metre ($) | ||||
| Category growth contributed (%) | ||||
| Shopper price perception |
A worked example
Illustrative. Written for this move guide. It describes no client.
A coffee brand sells through the two big grocers and specialty retailers.
- Its case to the buyer had been its market share and its advertising budget.
- The value story, in the retailer's own scan numbers, showed a higher rate of sale and return per shelf metre than the main competitor. It also showed the brand had brought most of the category's growth.
- Twenty items that set the category's price points were logged monthly, with promoted prices from scan data.
- The brand tracker carried the two price questions, and the top five buyers answered the same two at the terms round.
On a retake, all three practices could be answered at the middle stage.
Effort and dependencies
- Who. The commercial manager leads. The category or insights team builds the value story. Marketing adds the tracker questions.
- What you need. Scan data for your category, and a brand tracker you already run.
- How long. About six weeks for the first value story and three months of the price log.
- What gets in the way. A value story told in your numbers. The buyer reads the retailer's numbers, so build it in theirs.
How will you know it worked?
| Practice | You can answer Competent when | A document alone does not count if |
|---|---|---|
| Whether we can show each retailer what we are worth to them | For each major account you can show rate of sale, return per shelf metre and the category growth you bring, against competitors. | The story is built for one account and never shown to the buyer. |
| Whether competitor shelf and promoted prices are recorded over time | Competitor shelf prices for the category's key items are logged on a schedule by channel, and you can see how they moved. | Prices are collected for a range review and thrown away after it. |
| Whether shoppers' and retailers' view of our price position and value is measured over time | Shopper price perception and value for money are measured on a schedule, and the result is reported. | The questions were asked once. |
The worked examples are illustrative.
Think we've used your work without proper credit? Tell us and we'll fix it.