Working with Katie, the General Manager of a family meat processing organisation that has been operating for almost 40 years.

We worked together after Katie was prompted to action by a comment in a social media post on the importance of “fixing your pricing” to create Growing Profits in manufacturing.

The problem for Katie was that the profits were low for the effort everyone was putting in; she “instinctively knew” that there was a problem with the way they were setting their prices; BUT she did not have the knowledge or confidence to make any changes to the status quo!

The impact was a constant challenge to remain profitable, managing cash flow,  difficulty in determining where to invest to improve and a feeling of “carrying the load”, lacking confidence. This led to great frustration.

We worked through the “Right Pricing” module of my Profits & Growth where we focused on the 3 critical features – Understanding Your Costs; Loyalty – Why do your customers buy; and Value Pricing.

Katie and I built their cost model in a way that could be repeated over time, Identified their Customer Loyalty Hooks and established a Pricing Model that allowed her to make decisions across their basket of goods and distinct customer groups.

The outcomes of these actions have been an almost 4% improvement in gross profit, relieving strain on the cash flow, providing a repeatable model that is being used to make investment decisions in new equipment (to lower wage costs and increase productivity and quality); and more strategic choices for pricing their “basket of goods”.

Personally, Katie has the confidence to make decisions and recommendations to the MD and the knowledge required to lead the business in this critical area. No longer “carrying a load” of what to do or how should I look at my costs!

The key lessons from this case study are:

• Knowing your numbers is critical to making good business decisions
• Confidence in leading teams is built through having a deep understanding of the right way to approach things. Sometimes this means finding the right person to teach you “how to….”
• Using a cost plus approach to pricing can create limitations in your business. Understanding the principles of “Value Pricing” and the importance of customer loyalty hooks allows better decisions for profitability in your business.

The prescriptions we used in this case were:

• Establishing a model that is understood by the key people in the organisation and establishing a regular review of those numbers provides information for continually improving your business.
• By understanding the cost of manufacturing for your basket of products, you can identify those where there is an opportunity to improve the equipment and processes; these opportunities are usually well understood in the business, it’s just a case of shining the light on them!
• All customers have “loyalty hooks” or reasons they buy from their suppliers. Understanding these allows better decisions and stops you assuming it is only based on lowest prices.

If you are interested in more details on this case study, send us a  short email to info@graemefiztegarld.com.au

Worksheets and detailed case study notes are available to help you on your way to better pricing and profitability.