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1、WHITE PAPERCheckmate:Winning Strategies for the Ultimate Aftermarket Pricing MixAs executive pricing leaders working within manufacturing,we are amid industry-wide sea change.In particular,for Original Equip-ment Manufacturers(OEM),multiple external disruptive forces are creating challenges and oppo

2、rtunities in equal measure.Across recent years,we have seen global supply chains stress-tested to breaking point through pandemics and war.Yet,despite these generational hardships,the manufacturing sec-tor has continued to evolve at pace.This is in no small part due to the industry-wide adoption of

3、technologies such as Artificial Intelligence and Machine learning,which not only allowed us to adapt and pivot far quicker than we could in years previous when the need arose but also embraced opportunities to grow after-market revenue through more dynamic and effective approaches to pricing,opening

4、 the doors to greater profits and new long-term revenue streams.Indeed,these tools and technologies will form the backbone of our ability to overcome other challenges looming,such as increas-ing regulation around ESG and Digital Product Passports within the EU.They will allow us to embrace disruptio

5、n and harness the opportunities that it always brings.This white paper explores the aftermarkets pricing challenges,key considerations,and strategic solutions that can help organi-zations navigate the disruptive economy.It explores the limita-tions of traditional pricing models,the need to redefine

6、pricing for tangible and intangible offerings,and the role of value-based pricing,technology integration,and aftermarket mix optimisation in improving margins.This comprehensive paper exploring pricing challenges and con-siderations ends with a practical roadmap,offering actionable steps for service

7、 and pricing professionals to navigate the twists and turns of the aftermarket effectively.By following the steps in this report,organisations can align their pricing strategies with market dynamics,boost profitability,and enhance customer sat-isfaction.ContentsIntroductionWatch Out for the Pitfalls

8、 of Traditional Parts Pricing3Chapter 1Fine-Tune Pricing for Intangible vs.Tangible Offerings6Chapter 2Create Value With Strategic Pricing for Parts and Services10Chapter 3Roadmap for Optimising the Ultimate Aftermarket Pricing Mix22ConclusionOptimise the Aftermarket Pricing Mix14Chapter 4Integrate

9、Artificial Intelligence&Machine Learning in the Aftermarket Pricing Process19Chapter 5About25Introduction2COPPERBERG&SYNCRON WHITE PAPERCHECKMATE:WINNING STRATEGIES FOR THE ULTIMATE AFTERMARKET PRICING MIXEffective pricing is always a well-refined art.However,given the multiple layers of complexity

10、within the aftermarket supply chain and the many additional variables added into the mix,determining the value of spare parts demands a more strategic approach.Organisations in the industrial sector have long relied on traditional cost-plus models to determine spare parts pricing,meaning that the ma

11、in factor they considered was the manufacturing cost of the part.Then,they added a markup to secure a profit margin.However,when we consider rising customer expectations,easier access to third-party replicas and perhaps most critically of all,the shift to servitized or X-as-a-Service style agreement

12、s that blur the lines of parts,service and asset in terms of pricing,then a cost-plus,often proves inefficient when applied to spare parts.There are several reasons why,for example:The complex nature of spare parts:Spare parts come with their own unique set of challenges,including a vast array of co

13、mponents,varying lifecycles,and unpredictable demand.Traditional cost-plus models fall short of accurately quanti-fying the true value of spare parts,resulting in pricing mis-aligned with market dynamics,profit leaks,and lower cus-tomer satisfaction scores.Competitive industry players:The aftermarke

14、t segment in the industrial sector is highly competitive,with original equip-ment manufacturers(OEMs)and third-party providers fight-ing to win over service business deals.Organisations must understand their competitors pricing strategies to maintain a competitive edge and strategically position the

15、mselves to seize long-term revenue opportunities.Global pricing challenges:Managing prices across a global With the industrys shift towards everything-as-a-service in recent years,parts pricing has become more focused on sustaining profitability and ensuring customer loyalty.Chapter 1Watch Out for t

16、he Pitfalls of Traditional Parts PricingCHECKMATE:WINNING STRATEGIES FOR THE ULTIMATE AFTERMARKET PRICING MIX4WATCH OUT FOR THE PITFALLS OF TRADITIONAL PARTS PRICINGservice network increases pressure on organisations,with fluctuating market conditions,currency volatility,and regional demand variatio

17、ns continuously impacting pricing decisions.To navigate these challenges successfully,organi-sations must adopt intelligent,data-driven pricing strategies that unlock resilience and predictability.The limitations of the cost-plus model:Relying solely on the traditional cost-plus model for spare part

18、s pricing often yields sub-par results.This method overlooks critical fac-tors such as market demand,competitive pricing dynamics,and customer willingness to pay,resulting in profit leaks and decreased customer satisfaction.The impact of currency fluctuations:Currency exchange rate fluctuations can

19、significantly impact profit margins for global organisations,affecting revenue generation and market posi-tion.Manufacturers must closely monitor currency shifts and adjust pricing strategies to maintain profitability and compet-itiveness in the global marketplace.Due to traditional pricings limitat

20、ions,it has become apparent that the industrial sector must shift away from cost-plus models for spare parts pricing.There is an increased need to adopt more strategic and value-centric pricing strategies for spare parts and services.Spare parts come with their own unique set of challenges,including

21、 a vast array of components,varying lifecycles,and unpredictable demand.Chapter 2Fine-Tune Pricing for Intangible vs.Tangible OfferingsCOPPERBERG&SYNCRON WHITE PAPER5CHAPTER 1Tangible goods have physical attributes and quantifiable produc-tion costs,making it easy to calculate prices based on the co

22、st of raw materials,manufacturing expenses,market demand,and competitive pricing dynamics.Likewise,their quality and func-tionality are much easier to assess,facilitating more transparent pricing strategies.However,pricing intangible services,from integration and instal-lation to predictive maintena

23、nce,introduces different challenges and considerations.Services are abstract concepts compared to physical products and are often designed to address specific customer needs and preferences.They are customer-centric offerings that need to be continuously adapted and innovated.Thus,each service inter

24、action demands Pricing tangible goods like industrial equipment parts is a relatively straightforward process.Pricing intangible services,from integration and installation to predictive maintenance,introduces different challenges and considerations.a degree of customisation and personalisation to tr

25、uly meet cus-tomers individual expectations and pain points.As such,determining the value of a service becomes inherently subjective and should be evaluated based on factors such as perceived benefits,customer experience,customer impact,per-formance outcomes,delivery method,and the unique value prop

26、-osition offered by the service provider.Because services are much more difficult to quantify and evalu-ate than tangible parts,pricing them requires an in-depth under-standing of customer expectations,willingness to pay,and market dynamics.It also requires quantifying and accurately communi-cating

27、a services added value.And the list of considerations does not end here.Global service network management:Service pricing across a global network should account for market dynamics,cul-tural nuances,regulatory frameworks,and currency fluc-tuations,as all these influence pricing outcomes and sales.Im

28、plementing a holistic approach to global service network management is key to effectively managing prices across diverse regions.Agility,adaptability,and market intelligence can help organisations tailor their pricing strategies to spe-cific geographical regions and align prices with local market co

29、nditions and customer preferences.Trust and transparency:Transparency in pricing practices is essential for building trust and fostering long-term customer relationships.Customers value being told clearly and openly the reasoning behind pricing,and it helps them understand how factors such as raw ma

30、terial costs,operational over-heads,and value-added services contribute to pricing deci-sions.Transparent pricing enhances customer satisfaction,supports brand credibility,and fosters loyalty,driving sustain-able growth and market differentiation.Competitive pressure and differentiation:The service

31、indus-try is highly competitive,so pricing strategies must evolve beyond mere cost considerations and encompass compet-itive positioning and value differentiation to stand out in a COPPERBERG&SYNCRON WHITE PAPERCHECKMATE:WINNING STRATEGIES FOR THE ULTIMATE AFTERMARKET PRICING MIX78CHAPTER 2FINE-TUNE

32、 PRICING FOR INTANGIBLE VS.TANGIBLE OFFERINGScrowded marketplace.It is essential to balance competitive pricing and value-added services to attract and retain cus-tomers,secure profitability,and maintain market relevance.Furthermore,continuous innovation and differentiation in ser-vice offerings are

33、 critical to maintaining a competitive edge and sustaining long-term success.Pricing innovation:Organisations should always explore innovative pricing strategies prioritising value and customer satisfaction.Value-based pricing,for instance,is a custom-er-centric model that focuses on aligning pricin

34、g with the perceived value of the service to the customer rather than solely on costs.Adopting such value-and customer-centric strategies empowers organisations to optimise pricing deci-sions,boost profitability,and secure long-term customer relationships.Innovative pricing strategies,such as value-

35、based pricing,can help organisations drive sustainable growth and profit across both tangible parts and intangible service offerings.So,how can organ-isations create value further to boost profitability and customer satisfaction in the aftermarket?Chapter 3Create Value With Strategic Pricing for Par

36、ts and ServicesThe service industry is highly competitive,so pricing strategies must evolve beyond mere cost considerations and encompass competitive positioning and value differentiation to stand out in a crowded marketplace.COPPERBERG&SYNCRON WHITE PAPER9CHAPTER 2For spare parts,value-based pricin

37、g means understanding each components unique benefits to customers.Instead of just consid-ering the manufacturing cost,organisations can consider factors like reliability,efficiency,and how the part contributes to over-all operational performance and customer outcomes.This out-come-based approach en

38、ables them to set prices that align more closely with what customers are willing to pay based on the value they receive.For service contracts,value-based pricing means adjusting pricing structures to align with customers specific needs and preferences.Instead of offering a one-size-fits-all solution

39、,organisations quan-Unlike traditional cost-based and competitor-based pricing,value-based pricing puts customer value front and centre.This makes it the most reasonable model for pricing in the aftermarket.Quantifying customer value is at the core of value-based pricing.tify the value of each servi

40、ce delivered to the customer.This means accounting for factors like response time,maintenance quality,outcomes,and overall service experience.As such,value-based pricing benefits both spare parts and service contracts pricing by:Maximising customer value:Customers feel they get the most value for th

41、eir money.Enhancing perceived quality:Setting premium prices aligned with perceived value enhances the perceived quality of the offering.Improving customer satisfaction:Customers feel they are getting fair prices for the quality of the products and services they receive.Increasing profitability:Orga

42、nisations can justify higher prices and improve profit margins based on customer benefits.Maximising revenue:Organisations can capture the maxi-mum value from their products or services.Encouraging innovation:Organisations are prompted to con-tinuously innovate and improve their products and service

43、s to increase their perceived value.Figuring out what customers value and how to talk about itQuantifying customer value is at the core of value-based pricing.What are the specific needs,preferences,and pain points of cus-tomers?Translating such customer data into actionable insights and metrics is

44、the key to creating value.Communication is key to helping customers perceive that value as precisely as possible.Organisations should provide customers with transparent cost breakdowns to help them understand the value they receive for the price paid.They should likewise compare the value offered wi

45、th that of competitors to emphasise the unique benefits of the offer-ing further and reinforce the value proposition.Pricing software provides organisations with the necessary capabilities to obtain the data and insights to demonstrate value.COPPERBERG&SYNCRON WHITE PAPERCHECKMATE:WINNING STRATEGIES

46、 FOR THE ULTIMATE AFTERMARKET PRICING MIX1112CHAPTER 3CREATE VALUE WITH STRATEGIC PRICING FOR PARTS AND SERVICES Real-time monitoring:Using advanced software tools,organisations can track contract status,pricing,and coverage in real-time.The system continuously analyses data related to customer usag

47、e,contract terms,and market trends and provides insights into changes in customer behaviour,market conditions,and competitive pricing strategies.Thus,organi-sations can adjust pricing strategies to align with customers perceived value.Automated contract management:This system streamlines the entire

48、lifecycle of contracts,from creation and negoti-ation to execution and renewal.Contract drafting,approval workflows,and compliance monitoring are all automated with contra,and contract data is in one place to ensure accu-racy and consistency.In real-time,stakeholders are automat-ically notified abou

49、t contract status changes,pricing updates,and renewal opportunities.Scalability:Organisations need scalable pricing solutions to adjust pricing tiers easily,add new products or services,or customise pricing parameters to meet the specific needs of different customer segments.These solutions allow th

50、em to adapt to the ever-evolving market dynamics.Scalable solu-tions offer flexible pricing models and bespoke features,and they easily integrate with existing systems and workflows.Data analytics:Organisations capture data from a myriad of sources,including customer interactions,transaction histo-r

51、ies,market dynamics,and competitors.Analysing this data can help them better understand which services customers value most,which pricing strategies are most effective,and which market segments offer the highest growth potential.It also enables them to measure the impact of pricing adjust-ments,fore

52、cast future demand,and identify opportunities for optimization.Value-based pricing should be integral to aftermarket mix optimi-sation for OEMs and equipment service providers.It should inform decision-making regarding product and service design,differ-entiation,and innovation to ensure that offerin

53、gs meet customer expectations and competitive standards.Chapter 4Optimise the Aftermarket Pricing MixCOPPERBERG&SYNCRON WHITE PAPER13CHAPTER 3This means offering them spare parts,maintenance contracts,upgrades,and other services to keep them returning.How organisations price this blend of tangible a

54、nd intangible offer-ings can fill or drain their margins.Switching from cost-plus models to value-based pricing or developing a strategy is pivotal but not enough to optimise the aftermarket mix.Organisations should adapt and innovate to truly thrive on the current aftermarket and outshine the compe

55、tition.They should redefine the marketing and pricing of the aftermarket mix due to several factors shaping customer expectations.Complexity of industrial equipment:Industrial equipment involves complex machinery and systems with unique parts and components.As such,the marketing and pricing of fixin

56、g,maintaining,and replacing these parts requires increased focus.Long product life cycles:Industrial machinery typically has a longer life cycle than consumer goods.As it ages,the demand for aftermarket services and parts changes,and so should its pricing to accommodate the demands of the installed

57、base over time.Reliability and downtime reduction:Industrial equipment is expected to work well to avoid delays and boost productivity.Aftermarket services and parts are key to keeping equipment running smoothly and meeting those expectations.The mar-keting and pricing strategy should reflect the va

58、lue of equip-ment reliability and performance.Relationship-based sales and service:Sales and services foster long-term relationships between suppliers,manufac-turers,and customers.Good marketing and pricing strategies for aftermarket services and goods should focus on building The aftermarket pricin

59、g mix is essentially the toolkit organizations have available to maintain customer satisfaction and product performance long after the initial sale.Understanding what customers value and how much they are willing to invest in that value is key to creating relevant offerings.these relationships and o

60、ffering ongoing support as products are used over time.Regulatory compliance and safety standards:Industrial equipment is subject to strict safety protocols and regu-lations.When marketing and pricing the aftermarket mix,organisations should consider the costs of meeting these standards and ensure c

61、ustomers understand the value of safety and compliance.Technology advancements and innovation:As technology evolves,so does the industry.Aftermarket services often include new predictive maintenance or monitoring solutions,and organisations need to adjust pricing and marketing to show customers how

62、these new technologies can help them.Global supply chains and market dynamics:Organisa-tions operating in global supply chains constantly deal with demand,supply,and market changes.To market and price aftermarket services fairly,they need to understand these changes and be able to adjust their strat

63、egies to stay competitive.COPPERBERG&SYNCRON WHITE PAPERCHECKMATE:WINNING STRATEGIES FOR THE ULTIMATE AFTERMARKET PRICING MIX1516CHAPTER 4OPTIMISE THE AFTERMARKET PRICING MIXCrafting fair and transparent pricing strategiesWhen redefining pricing and marketing for the aftermarket mix,organisations sh

64、ould rethink how prices are set and ensure they are fair and transparent to customers.Once the prices are reset,they should use their understanding of customer behaviour to commu-nicate the added value and break down the costs effectively.It is not premium pricing that churns customers away;it is th

65、e lack of effective value communication.Leveraging data-driven insightsData can tell organisations much about their customers,competi-tion,and market.Using intelligent data analytics and AI,they can use said data to develop pricing models that cater to different customer segments.Offering a range of

66、 pricing options enables them to attract a wider range of customers,nurture existing ones,and sustain growth over time.Developing competitive pricing strategiesOrganisations must align their pricing with what customers expect and what competitors offer.By continuously monitoring market changes and a

67、djusting pricing accordingly,they can gain a larger market share and stay ahead of competitors.Adapting,building resilience,unlocking agilityIt is paramount to be agile,adaptive,and able to respond quickly to changes in market or customer needs.However,pricing pro-fessionals alone cannot forecast an

68、d meet customer demands or stay updated on market trends in the competitive aftermarket.They need solutions like data analytics and automation to help the organisation adapt and become more agile.Adopting value-centric pricing principlesUnderstanding what customers value and how much they are willin

69、g to invest in that value is key to creating relevant offerings.Pricing software solutions help organisations develop value-based pricing models for their offerings and efficiently deliver them to customers.Investing in intelligent aftermarket parts pricingStrategic investment in advanced pricing so

70、lutions specifically designed for aftermarket products and services helps organisa-tions adapt more effectively to changing customer preferences and market dynamics.It is paramount to be agile,adaptive,and able to respond quickly to changes in market or customer needs.COPPERBERG&SYNCRON WHITE PAPERC

71、HECKMATE:WINNING STRATEGIES FOR THE ULTIMATE AFTERMARKET PRICING MIX1718CHAPTER 4OPTIMISE THE AFTERMARKET PRICING MIXChapter 5Integrate Artificial Intelligence&Machine Learning in the Aftermarket Pricing ProcessHowever,this is for good reason.In modern organizations,where data-led decisions drive th

72、e business forward,AI is no longer a nice-to-have future technology.It is rapidly becoming the back-bone of all aspects of operational excellence.Integrating AI and the subset of Machine Learning into aftermarket operations is key to helping organisations achieve the objectives discussed throughout

73、this white paper:Overcoming traditional parts pricing structure limitations;Navigating the challenges of pricing intangible service offerings;Implementing value-based pricing for parts and contracts;Optimising the ultimate aftermarket mix.Integrating AI and ML alongside other technologies into after

74、-market pricing processes means connecting pricing with other key systems in the organisation,such as inventory management,customer relationship management(CRM),and enterprise resource planning(ERP)systems.This ecosystem enables organisations to understand better how pricing fits into the bigger ope

75、rational picture.More importantly,pricing software unlocks capabilities critical for aftermarket excellence.Global-scale automation:Automated pricing management systems simplify operations for global organisations.They ensure consistency across regions and enable quick adjust-ments to market changes

76、,boosting operational efficiency.Advanced price modelling:Organisations can gain insights into the factors impacting their pricing strategies through advanced price modelling,better aligning with market dynamics and adjusting prices in real-time.Real-time insights for market response:Rapid market sh

77、ifts demand agile pricing strategies.Pricing software gives Artificial Intelligence(AI)is a Hot-button topic not just within the manufacturing sector but across all industries worldwide.CHECKMATE:WINNING STRATEGIES FOR THE ULTIMATE AFTERMARKET PRICING MIX20INTEGRATE AI&ML IN THE AFTERMARKET PRICING

78、PROCESSorganisations real-time insights,enabling swift responses to demand changes and competitive pressures.Optimal price forecasting:Predictive analytics enable organ-isations to plan parts delivery better,ensuring they meet service level agreements and control costs.This leads to accurate forecas

79、ting and smoother integration.Improved service levels and cost efficiency:Organisa-tions can enhance service levels and save costs by reduc-ing unplanned downtime and building resilience,which can directly impact their pricing strategies and marketing efforts.Precise pricing optimisation:Organisatio

80、ns can fine-tune parts and service contract pricing with automated pricing and technologies like artificial intelligence and machine learning.This streamlines operations,boosts efficiency,and supports better marketing initiatives.Efficient service and contract pricing:Automation in pricing processes

81、 helps organisations secure recurring revenue and gain better visibility across the service lifecycle.This results in accurate pricing,improved decision-making,and contract renewals.Technological integration is key in the aftermarket business,where foresight and streamlined services create a competi

82、tive edge.Organisations can get ahead and sustain long-term growth by leveraging pricing software to help quantify,create,communicate,and deliver their value propositions globally.Rapid market shifts demand agile pricing strategies.ConclusionRoadmap for Optimising the Ultimate Aftermarket Pricing Mi

83、xCOPPERBERG&SYNCRON WHITE PAPER21CHAPTER 5Create value with strategic pricing for parts and servicesAdopt value-based pricing principles to align prices with customer perception of valueAdjust service contract pricing to align with specific customer needs and preferencesOptimise pricing strategies a

84、nd drive sustainable growth with data analyticsQuantify customer value to understand pricing preferences and expectations Communicate value through transparent cost breakdowns and competitor comparisonsWatch out for the pitfalls of traditional parts pricingEvaluate the limitations of traditional cos

85、t-plus models for spare parts value pricingAdapt to global currency fluctuations and regional demand variations Simplify traditional price modelling to ensure accurate pricing decisionsAssess the complexity of the spare parts inventory management and its challengesStay informed about competitor pric

86、ing in the aftermarketFine-tune pricing for intangible vs.tangible offeringsDetermine factors influencing the pricing of tangible industrial equipment partsBuild customer trust and transparency in global service pricingDevelop strategies to quantify and communicate the added value of servicesEvaluat

87、e the complexity of pricing services and their customisation for each customerAddress global service network management and currency exchange fluctuationsOptimise the aftermarket mixRedefine marketing and pricing strategies to meet diverse customer needsEvaluate the complexity of industrial equipmen

88、t and its lifecycle in pricing decisionsEvaluate the role of reliability and downtime reduction in aftermarket pricingLeverage data-driven insights to set competitive pricing strategiesStay agile and adaptive in responding to market dynamicsIntegrate technology in the aftermarket pricing processEmbr

89、ace automated pricing management systems for global scalabilityAssess integration of pricing software with other key systemsOptimise service and contract pricing through automation and technological innovationUtilise advanced price modelling for accurate,value-based pricing decisionsLeverage real-ti

90、me market insights for adaptive pricing strategiesNeed help completing your checklist?Partner up with Syncron to check the boxesCOPPERBERG&SYNCRON WHITE PAPERCHECKMATE:WINNING STRATEGIES FOR THE ULTIMATE AFTERMARKET PRICING MIX2324CONCLUSIONROADMAP FOR OPTIMISING THE ULTIMATE AFTERMARKET PRICING MIX

91、Copperberg is an expert original content creation company spe-cialising in the manufacturing sector.With years of experience,we have cultivated a robust global busi-ness network,supported by continuous research and relationships with key stakeholders in the manufacturing industry.Our reputa-tion for

92、 reliability and success is built on delivering outstanding platforms that provide key insights into industry challenges,future trends,and market developments.Our business platforms serve as catalysts for growth and global relationship-building within the industry.Syncron helps manufacturers and dis

93、tributors capitalize on the new service economy by optimizing aftermarket profitability,increasing customer loyalty and enabling the transition to servitization.Syncron aligns all aftermarket services with its Connected Service Experience(CSX)cloud platform,helping companies differentiate themselves

94、 through exceptional aftermarket experiences while driving significant revenue growth.The worlds top brands trust Syncron,making it the largest privately-owned global leader in intelligent service lifecycle management SaaS AboutSyncron About CCOPPERBERG&SYNCRON WHITE PAPERCHECKMATE:WINNING STRATEGIES FOR THE ULTIMATE AFTERMARKET PRICING MIX2526ABOUTABOUT