March 16, 2022

Industrial Pricing Strategies

Industrial Pricing Strategies

Joining us this week on episode 54 of Augmented Season Two (@augmentedpod), is Lydia M. Di Liello (@LydiaDiLiello), CEO and Founder of Capital Pricing Consultants, as well as the host of The WAM Podcast: Empowering Women in Manufacturing and Business. (@wam_podcast) The topic is: "Industrial Pricing Strategies." Augmented reveals the stories behind the new era of industrial operations, where technology will restore the agility of frontline workers. Technology is changing rapidly. What’s next in the digital factory? Who is leading the change? What are the key skills to learn and how to stay up to date on manufacturing and industry 4.0? Augmented is a podcast for industrial leaders, process engineers, and shop floor operators, hosted by futurist Trond Arne Undheim (@trondau), presented by Tulip, the frontline operations platform. 

My takeaway is: I can admit to often underestimating the strategic role of pricing in determining industrial developments, new entrance, exciting business models, and testing and or scaling the products.

I am not surprised that there are pricing consultants because the area is complex and you need both data and experience to play it right. The future of pricing is undoubtedly influenced by ever-evolving analytics about the purchasing habits of people in business. But is also shaped by the x-factors of the emerging future. At the end of the day, pricing is a high-priority leadership topic, but also, one that will be shaped by specialists.

Thanks for listening. If you like the show subscribe to augmentedpodcast. co or on your preferred podcast player. And rate us with 5 stars. If you liked this episode, you might also like episode 41 "Scaling Software Movements," episode 50, "The Last Mile of Productivity," or episode 49 "Lean Manufacturing in the USA" Hopefully you'll find something awesome in these or other episodes. If so, let us know by messaging us your thoughts. We would love to share your thoughts with other listeners.

The Augmented podcast is created in association with Tulip, the connected frontline operations platform that connects the people, machines, devices, and the systems used in a production or logistics process in a physical location. Tulip is democratizing technology and empowering those closest to operations to solve problems. Tulip is also hiring. You can find Tulip at Tulip.co.

Please share this show with colleagues who care about where industrial tech is heading. 

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See you next time. Augmented--industrial conversations that matter. 

Transcript

Trond Arne Undheim: [00:00:00] [00:00:00] Welcome to another episode of the Augmented Podcast. Augmented reveals the stories behind the new era of industrial operations, where technology will restore the agility of frontline workers. Technology is changing rapidly. What's next in the digital factory? Who is leading the change? What are the key skills to learn and how to stay up to date on manufacturing and industry 4.0? 

In episode 54 of the podcast, the topic is: Industrial Pricing Strategies. Our guest is Lydia DVLO, CEO, and founder of capital pricing consultants, and also a cohost of the podcast. We're empowered with it. Interview empowered women. And this conversation, we talk about the pivotal principle of pricing, which has become even more important as industry is reshaping itself, due to technology change, risk and globalization.

What is the role of tech in the pricing space and [00:01:00] why is it not as effective as it should be? What about hardware and software and pricing and how to use the discovery analysis and recommendation framework that the video in the past, we discussed industry best practices and touched on a few case studies from NCI to JC penny.

You cover the future Augmented podcast, industrial leaders, process engineers, and shop. I did by futurist, through presented by to the frontline operations platform, Augmented industrial conversations that matter. Lydia, how are you today? 

Lydia M. Di Liello: Doing well? Trond on yourself. Yeah, I'm 

Trond Arne Undheim: doing great. I think this is a perfect day to talk about pricing and stress.

Lydia M. Di Liello: I always think it's a perfect day to talk about pricing and strategy. Since it's what I live for. 

Trond Arne Undheim: I had a hunch. I had a hunch. Lydia, you are the founder of your own company. You do consulting. You [00:02:00] are requested here, there, and everywhere because it's a rare expertise. I think comparatively, it's not everybody.

That's a pricing expert. It's such an important feature of many, if not most businesses. It's a very interesting. You have worked a lot in manufacturing and you were on the pricing society, board of advisors, all of these places that I know very little about. So this is going to be exciting. 

Lydia M. Di Liello: I'm looking forward to it.

Trond 

Trond Arne Undheim: so you also have an MBA and I'm assuming back when you got the MBA pricing, wasn't just the only topic on the NBA roster. I'm curious how you then navigate your way to pro. 

Lydia M. Di Liello: You're absolutely right. Pricing was not on the radar at all. And it was a bit of a serendipitous story. I graduated with my MBA and I received an opportunity to work for general motors.

It was actually a lottery system. My brother-in-law worked there as an engineer. He received a lottery ticket quote and won. And [00:03:00] those were the days when they were selling these tickets for $10,000 a person, because it was guaranteed lifetime employment, which is unheard of in our culture now, anywhere in the globe, even 

Trond Arne Undheim: right there, there was a ticket.

Lydia M. Di Liello: And so my brother-in-law said, if you want to work for GM, I'll put your name in. And I did, which meant I was working second shift. So afternoon. Three to midnight. And I was plugging wiring harnesses for Buick automobiles, and I started my career there and had an opportunity to move off the shop floor in nine months into competitive intelligence.

And that was the start of pricing because Trond, I would have applied for anything that got me off of working. Second shift. 

Trond Arne Undheim: You know, people's careers and the way they shift, even in the past nowadays, like it goes so fast that it's even crazier, but even before. It's just fascinating to me. I always ask this question.

How did you kind of end up on the topic that we're talking about? And it's [00:04:00] usually fairly serendipitous. 

Lydia M. Di Liello: Yeah, I stayed because for me it was the ability to blend art and science. And that's what I really loved was the intrigue of how did you arrive at a certain price point? And so many times it was purely accidental or not intentional at the very least.

Adding science into it to say, what should those prices be? How could we target a specific kind of marketplace or a particular kind of customer behavior? And that's really, what's intrigued me over all these. 

Trond Arne Undheim: That's fascinating. And we'll dive deep into this because I think the only reason right now that some young people are excited about pricing, I think is that they tie it up in with analytics and AI and quantitative sort of strategies and like looking into deep data and figuring out, and then of course famously, you know, retailers and Amazon.

W we are becoming more and more aware that we're faced with, you know, machines versus us. And these machines are out pricing us. But even before [00:05:00] that, there was you. So I'm curious, you know, what goes through a pricing mind and especially in industry, obviously industrial pricing strategies, maybe you could lay out the field a little bit for us.

So what is the pricing? When was it actually established as even as a field? Because like you said, Even though it's so important to a business. I mean, without the right price, you're not going to get clients. And with a better price, you might get more and more revenue or more clients and less revenue and all of these choices you could make at any given moment and they will impact your business.

Why don't you lay it out for us as a field? Where do you dig to get better? Either at the art or the science 

Lydia M. Di Liello: of price? So to answer your first question Trond which I've not been asked that before. So it's really interesting that you're taking this approach. I would say the field is 30 to 35 years. In terms of having been established and they think the way it was established really was the professional pricing society kind of came into being to address that need the gentleman that [00:06:00] founded it.

Eric Mitchell had worked for, I believe it was the Ford motor company and said, you know, there's a real need here. People are just essentially throwing up numbers to see what sticks there was. No AI back then analytics was Excel spreadsheets. In most cases. So the depth and the breadth of what we now consider to be animals.

I don't think really existed. And so to me, establishing that organization and raising the issue in the marketplace to say, Hey, wait a minute. Why are we as a business? Not looking at all of the dimensions of how we're going to market one of the critical ones being and at what price does the customer actually buy at?

And what are the trade offs like you mentioned, do you want more revenue and less customers? Do you mean. Just more customers. Do you want profitability? So I think that's really when the industry itself, if you will, or the segment of pricing was created that discipline of pricing. And I think now it has morphed and has [00:07:00] graduated or become more sophisticated to be very much into.

AI and analytics, as you mentioned. And I think there's a third dimension now try and especially, which is supply chain. And I believe the companies that are going to be the most successful in business are those that are tying supply chain and pricing together. I listened to a Barron's podcast and they were talking with the CEO of Lowe's and he specifically said, and I think his name is Marvin Ellison.

That is the first time I have heard a fortune 500 CEO specifically call out pricing and I'm going to paraphrase. But his comment was essentially, he didn't realize how much power and what they could drive to the bottom line by tying supply chain and pricing. Can you tell 

Trond Arne Undheim: me more about that? Because it's not immediately obvious to me what that means.

I could kind of take a guess and certainly, you know, we can talk about the building sector and stuff because they are really, the prices have been immediately passed on to all of us [00:08:00] and to builders, but you know, fairly immediately straight on to people trying to do additions on their houses, but talk about what is the Lowe's CEO talking about here specific.

Lydia M. Di Liello: So the way I interpreted his remarks because he did not extrapolate in great detail, but the way I interpreted what was being said is when you look at how you are procuring a good, what does it cost you to bring that good into your organization? That's your raw. How many times do you handle it?

What's involved relative to then passing it on. Are you adding value to it? Are you just purely taking the widget and passing that widget directly onto your customer? So knowing that obviously the old adage of what's your cost side. Okay. That's old hat. If you will. Everyone's used to talking about that part of supply chain where I think this is unique.

When you talk about at what price point you go to market. So often those two things are never considered until the end of the quarter. When we true up all of the financial [00:09:00] statements and we say, wait a minute, oh, gee, the costs went way up. Now we're chasing a price increased to try to make up that cost increase.

Where to your point, when you talk about the buildings indices. I think by their nature, they were already very closely aligning supply chain along with pricing because they had to relative to their raw material cost basically is their business, if you will. And so I think other businesses that have never seen the need to so closely connect, those two points are now beginning to understand that if I know what my total cost is, right.

As part of any business decision and it's not forecasted any, it's not some huge effort to get to that cost because that's the other thing I find Toronto is if you ask a company, what is your cost? I usually get glazed looks around the table and they say which one did you want? Well, the cost is what I [00:10:00] want.

And then we get into is it a just-in-time cost? And is it the variable costs? That, is it fixed? Is it average? Is it right down the line? Right. So I think when you tie supply chain and pricing together, you have those conversations into. Rather than separate and then your bottom line and your opportunity to take those cost increases and make sure your profitability is as strong as possible is much.

Trond Arne Undheim: So let me share a kind of a dumb example of this, but when I bought my house and built the additions needed, or, you know, renovated my house, I was so scared of delays and I was able to negotiate with our design builder, a very unusual now that I understand it, very unusual contract whereby I actually had on paper.

If he was delayed, he would pay me. And he would pay the hotel for my family. And if he accelerated or wasn't on time, he would get a bonus. And nowadays, like that contract would be crazy. Because not only [00:11:00] are there pricing increases associated perhaps even with like accelerated supply chains, but I've heard that even some basic things like a washer could be backed up for months, but, you know, as a consumer or even more as a business builder, you know, these are the costs.

Like if you are running into delays, this could mean you have to postpone, you know, moving into a building or some very important company. And certainly you'll have extra costs. So it is so tied together yet in many businesses, they were never tied together or people refused to see them as. 

Lydia M. Di Liello: And I love that example.

I think that's a fantastic negotiation technique. So I have to ask, was your builder on time or what do you think happened? I think he was ahead of schedule because he wanted, 

Trond Arne Undheim: he did it like, I think a couple of days ahead, they were certainly, you know, right on time, you know, military background, great design builder.

And anyway, it was fantastic. Maybe I'll link to it in the show notes. 

Lydia M. Di Liello: Please do. And, something else to share along [00:12:00] those same lines, the wall street journal think just a couple of days ago, talked about the fact that there was concern overstock stability because of wall Street's concerned that companies are not getting out in front of all of these costs increases that there's too large of a lag between their actual cost increases.

And when they're executing against them and how much they're actually capturing. In terms of those increases and that's the single thing I preach really to every client I talk to because there's a natural reticence for some reason, in so many industries and manufacturing to not want to rock the boat or upset the customer or pass on this cost increase.

And the more reticent the manufacturer is, the more painful it is. Later in the process, not only for the manufacturer because they're losing money, but also for the client or the customer, because they can't take a 20% increase. When the manufacturer finally realizes they're underwater, they're negative and [00:13:00] profit.

Trond Arne Undheim: That's so interesting. Well, we'll get to your framework in a second, but before that, because that's really interesting to have a good handle on it. I think probably on, on either side of the pricing, even if you were sort of subjected to prices, the transparency aspects are important, but let's just hit on a couple of news stories here or other sort of more famous cases that are out there that, that will make people relate a little bit to this question.

So you have. With a bunch of companies that are known and we can't talk about all of them, but some of them we can talk about. But then in the news just right now, is this very interesting pricing and antitrust question around the airlines? Well, what's that about Lydia? And what do you mean. The Biden administration is kind of asserting itself, post Trump, whether they are, 

Lydia M. Di Liello: so it was embarrassed this morning.

And I was really surprised to see this, that American airlines and JetBlue are trying to partner together for basically the Northeast section of the [00:14:00] United States to take over routes that were predominantly run by Delta and United. And the Biden administration has stepped in and said, Can't do that.

This is an antitrust issue. There's basically four major air carriers in the United States. And as a result, if you try to partner, you're going to dramatically shrink the market down. They said 80% of the market was captured by those four airlines. What I make of this Trond is it great posturing? And it's a nice stance.

However, I don't think there's any real teeth to this because as I read through it, it specifically said that one of the criteria is that American airlines and jet blue agreed that they wouldn't talk about the fairs, nor would they talk about. Well, I mean, come on. Anybody that's ever partnered in anything, we, although without a shadow of a doubt, right?

These prices are going back and forth across the table. And they may not be sent by [00:15:00] email files that are traceable, but it's very clear. There's going to be a golf game and numbers are going to get excited. It's going to be a 

Trond Arne Undheim: new language developed to not talk about prices, but still hint at prices.

Lydia M. Di Liello: Absolutely. So I think it's a farce, but on the other side, I think it's interesting that they're actually putting them through the legal hoops. Of actually defending their case and why this is a dance I trust and what they're going to do about it. And so I wonder if the fares will be watched closely. So now as a consumer, I'm anxious to see what does this do to jet Blue's traditionally lower cost fares.

And what does it do to Americans, which certainly have not generally been perceived as being discounted. So stay tuned on that one, but I do think it's really interesting that it's hitting the news. And finally, we're talking about pricing in this. 

Trond Arne Undheim: And it's interesting timing about not being able to talk about pricing in an environment, which I would think for most people, pricing is as important as ever [00:16:00] tell me about strategic pricing anyway.

And some of the, some of these other cases, I mean, is there anything else that matters at the end of the day in a business? I mean, where would you start when you're at that level, you know, at the massive business, I mean, is there any other issue that's more important than pricing? I can almost not think.

Lydia M. Di Liello: So I touch anything Trond that has to do with price to make sure that I'm not missing something significant relative to are there issues in manufacturing there's specific bottlenecks about ability to serve a customer? For example, NCI the buildings, manufacturing company that I. One of their challenges was where they had multiple locations available to serve customers and how those were being managed.

And so it was important to know about that information as we talked about price, because it indirectly affected price. From the standpoint of, if I've got to ship these building materials from a further [00:17:00] location, we now have incurred more shipping costs. Can we pass that onto the customer? Yes or no? How do we pass that on?

And that was prior to the craziness and the construction industry. Now we're a two by four, went from being $2 and 48 cents to quite literally being $8 and 42 cents. So the numbers have flipped, but they're by order of magnitude of. So anybody not passing along that cost increase is dead in the water relative to profitability.

And that goes directly back to your question about, is there anything more important than strategy? In my opinion, no, because if you're not talking strategy from the CEO through the director, down through the pricing person, who's actually approving. If everybody's believing a different strategy and executing differently, which I find whether it's a fortune 500 Trond or a startup, I never find a company where everyone believes the same thing doesn't happen.[00:18:00] 

And so 

Trond Arne Undheim: that's funny you mentioned startups, like, I want to talk about those specifically because clearly the issues are somewhat different, but just right before that, JC penny, I don't know if you said you had worked with them, but they certainly, they're always in news and, you know, bankruptcy and all.

There are some issues there perhaps regarding pricing. What was your take on that case when it came to how they have handled pricing? 

Lydia M. Di Liello: So I believe there was a tremendous disconnect relative to strategy, as well as voice of customer. I think that was a twofold issue from a strategic standpoint.

Going into change a company whose history has always been about a discount persona to the marketplace and suddenly moving to this everyday price that no consumer wants at any part of the experience for the customer. Was that idea of, would they get 30% off on that scratch off or would it be 10? It was a bit of a lottery, but that was part of what drove the excitement or the interest in going to shop at Penney's [00:19:00] because you knew you were getting a decent.

I was guaranteed. You just didn't know the degree to which you were getting that discount. And when executive management chose to move away from a core strategy, which had defined the company throughout its history, I thought that was a tremendous mistake. And then be to stop the discount again, move to the polar opposite.

Clearly did not pay off for them at all. 

Trond Arne Undheim: It seems to be a lot of psychology going on there. I mean, you said the art and science let's go to the, I don't know if you consider psychology art or science, some people call it both, right? I mean, certainly psychology perhaps into both, but studying psychology can be a scientific endeavor, but I mean, I'm joking a little bit here, but the psychology of the consumer is at play here.

Lydia M. Di Liello: Without a shadow of a doubt Trond and understanding that because it's so different for each market and it can be different within the same industry. If we look at retail, look at Amazon, there is not a discount mindset there, but there is a mindset of convenience, [00:20:00] availability, subscription, willingness to pay.

I'm a prime member. So I want to check Amazon first that ships for free and shows up at my door. It's convenient. I don't have to pay shipping. So those are my psychological expectations whenever I get on to Amazon. 

Trond Arne Undheim: Yeah. Can you talk about B2B a little, because we're a lot concerned with the industrial sector and industrial tech in particular, whether you have smart young startups selling to bigger manufacturers, or it is vice versa.

How does pricing work in the B2B? 

Lydia M. Di Liello: So I think the single biggest mistake that all B to BS make is that they always want to just do cost plus pricing or margin derived. So either they're saying my cost is X and I'm going to add a 20% margin. And therefore my price is 1.2, essentially, or they will say, I need a margin of 30% minimum.

Therefore everything is set at 30% and they don't look. What [00:21:00] their business customer actually needs. What are they actually delivering to that business customer? They're not looking at the value proposition, which is also a blend of art and science for matron and something that I always defined with my clients, because what a company believes they're delivering to their customer is very often not at all what they're doing.

So a manufacturer that I worked with was in custom plastic bags and they believed what they were offering. The customer was in fact, a customized plastic. No, that was not it not from my perspective. No. What they were offering was a, in some cases it was a specific sales mechanism, so it was a vision to the customer.

So it was about packaging. It was about presentation. It was about, could it stand up and sit upright on a shelf so that a customer saw it directly as in a food packaging. If it was Goldie. They were offering the jeweler, the opportunity to keep the product on the shelf without [00:22:00] tarnishing, because they've put anti tarnish chemicals into the bag itself.

So it's very much about addressing what that specific product is doing for your business customer and not just the thing you think you're saying. 

Trond Arne Undheim: Fantastic. So if you are a startup then, and your perception is that you don't control pricing because you're newer in the marketplace. How should you go about thinking about perceived value?

Because you're still establishing. 

Lydia M. Di Liello: And so I think the single most important thing to us is being open to learning from it and not being set and walking in and saying pricing has to be X, but rather going in and having conversations with the people you're selling to and saying, what does this do for.

What could I do better or differently and listen, because as they are telling you, for example, with the jeweler, who said, you know, I can't just lay these on my shelf because they tarnish, okay. Value add, we can put something in [00:23:00] to keep it from tarnishing. That is worth something. When you're a startup you're doing.

Everything and anything you can to land business. So what are the unique things you're doing for any one of your customers to land that business? Are you agreeing to specific delivery requirements? Are you offering to drive it yourself to a special location? Are you packaging it in some way to accommodate an issue they're having?

Are you holding inventory? Are you guaranteeing inventory? Especially right now. Where supply chain is so impacted globally. I think anything that a startup can do to give reassurances that they will protect their customer's business has very high value. And so they want to make sure. And then the second step is once they identify it, take prices.

Don't say, Hey, Trond I brought this to your house and I'm holding inventory for you. And I've added every bell and whistle possible. Please stay my [00:24:00] customer wrong approach. Say for this service, for this value, your price is going up 15. Wow. 

Trond Arne Undheim: Can we talk specifics about one thing that, you know, certainly is a big focus for us here on the podcast, which is sort of this, the two cultures in manufacturing when it comes to technology.

So the operational technology culture, which you could very briefly sort of characterize by the, I guess, the traditional way to approach technology in a business. And there were certain, for example, on the software side, certain types of business models associated with that typically, you know, a big initial cost and then a high service cost and certainly a high implementation cost followed by a service costs.

And then these newer models obviously are more either just explore for free and have some fun. And then we'll slap on a monthly, low. Subscription SAS price. And then, you know, if you, for some reason, I interested in a hundred units. Now we're talking more money, but you can try it all [00:25:00] for free and we'll come there and help you and all that stuff.

How does pricing culture play into this? And what do you think is shaking out there when it comes to purchasing technology for a manufacturer today on. 

Lydia M. Di Liello: So I think to your point, Trond the whole basis of software technology has changed relative to pricing. And so what used to be exactly, as you said, a very high investment for implementation and it was on premise and then you still paid a maintenance fee for the year added up to dramatic.

On an annual basis, I would say in the last five years, most especially, and from a speed perspective, the last two where I've seen most, everything moved to subscription model, when you were talking about, try it for a short period. What I see happening now is more try a section of something specifically analytics, for example, but it is gated very tightly.

And so you only can play if you will, with a [00:26:00] very defined part of this. And generally what I'm seeing is it's just analytics to kind of get you hooked and interested. And then of course, with the analytics, what I find is most clients start to learn what they really aren't. And so if it's a natural hook for the software companies, because then they say, well, we can show you what it would be like to control your deal.

So you know how much you're actually selling to this specific vendor as a side out of that, Trond one of the things I kind of find entertaining is how many times I see companies horrified when they realize the degree to which they've discounted their absolute worst cost. And that comes out in the analytics.

And I always ask for those reports because I know there's going to be fun in those. Why 

Trond Arne Undheim: do people do that? And by the way, I love your term, the absolute worst customers. I thought one couldn't speak of customers that way, but I, you have a pretty Frank demeanor about 

Lydia M. Di Liello: you. Yeah. I actually also recommend that clients fire customers, which is always an interesting conversation as well.[00:27:00] 

But ask the question again. I was just curious, 

Trond Arne Undheim: well, you know, firing customers, th this whole idea of being very Frank about what is a good and a bad customer you know, from your perspective, basically, they're not amenable to your pricing strategy essentially, and you're forced to do discounts, you said or they, for some reason received.

This counts left and right. Maybe because there's no coordination of discounts or no understanding of why there would be a deserved discount. 

Lydia M. Di Liello: And in addition, trunk, exactly what you said, and they make a lot of noise. They are a very high pain point. So I worked with that plastics company. One of their distributors was notorious for getting discounts because he was just making.

He was absolutely nasty. And so we finally called them on it with the CEO. He didn't know the CEO was on the phone with me at the time while he was being nasty. And the CEO said, Hey, you know what, we're not going to do this anymore. Phil [00:28:00] cut it. And after that we built the level of respect and he started taking the price increases, but it's everything from history, Onyx, right?

The academy award of carrying on to the threat of losing business, which we all always worry about. And depending on where we're at in the hierarchy, in an organization, if you own sales, you don't want to be on record for why you left the sales go, unless you've got the organizational support behind you.

So yeah. As you said, discounts that are not concatenated or awareness around the combination of the discounts. It can be a lot of things like special services this week. You asked me for special delivery terms in a month, you know, it's Hey, Lydia, can you just do this for me once? Watch out. I warn everyone in manufacturing.

Watch out for the one-time. There are never one time. One time becomes the next month. I need the favor and the third time, and you're never collecting money for watch a [00:29:00] provider. 

Trond Arne Undheim: So Lydia, when companies realize that they have no handle on this and they want to bring in the troops, you bring in your Dar framework, what's the Dar framework.

Lydia M. Di Liello: So it's a trademarked methodology that I utilize, which is discovery, assessment and recommendations. And you know what they say about a prophet is someone from another town, right? We can all say the same thing in our own companies or parts of it. And I've seen companies who start a process of analysis.

And maybe they make some cursory recommendations, but they don't have the ability to tie it into corporate strategy. And so, as I mentioned earlier, I always start with the CEO and with the corporate strategy, what are the top two or three things that the CEO wants and expects from a strategic corporate standpoint?

How does that carry them through all the way down to customer service? Who's entering the keystrokes to make that sale. How has that translated out in the field? Where do the discounts [00:30:00] happen? So I look at everything around strategy, business process, around software and how the software does or doesn't support what they're doing.

So often. I see companies who, their strategies pretty decent, their business processes could use some showing up, but they're not bad. And the software that they're forced to work around. Is so inefficient, it causes problems and actually is causing them to lose profitability. And so as I go through this discovery assessment and then make recommendations, it really provides an executive dossier on here's everything touching.

Here's the impact to the business and here's the places the changes could be made, whether it is governance of pricing, whether it's business policy, whether it is along business process, to give a specific, I had one client, large fortune 500 who actually was discounting a quote three times [00:31:00] before it went out the door.

And no one knew it was happening, but I walk processes. Trond, that's something I actually learned from general motors on second shift, walk around the shop floor. People don't intentionally lie to you. They believe in their head what they've told you, but when you sit next to someone and they said, well, I discounted it.

Okay. And then I pass it to John and he discounts it again. How come, why? Well, because we're afraid we've made a mistake. So we each check each other's work, but then we each have to give a third discount. And that was great fun because the chief operating officer put down everything she was working on and she looked at me and she said, could you say that again?

That's what it's really fun because you can see the difference the business is going to make as a result. 

Trond Arne Undheim: Wow. Lydia, my last question for you is we've been dancing around tech in the pricing space and Y you know, tech pricing isn't as, as efficient as it could be. And of course there are some cultural issues there, but the [00:32:00] larger issue.

It seems is that tech is sometimes sold as you know, it's a solution to a problem, but of course, tech without consideration for a host of other issues, whether it is in, on this cyber side on security side, which is now becoming more obvious, or it has to do with more like business policies and even governance issues, it doesn't solve everything.

But how do you take that into account? When you are selling a product without, I guess, overselling and also just, you know, in all fairness, tech is just part of the solution. How does that come into play for you? So 

Lydia M. Di Liello: for me, it's always about starting with business process first and making sure that we have a very strong baseline to work from before we talk technology.

So always with every client, it's the Dar first. And once we have the output of that, to know what opportunities we have, what risks are there. Before we talk about what software application makes sense does the one they have fit what they really need to do, [00:33:00] because otherwise we're only automating that, which is not efficient and not functional.

You could lose money faster. Trond doing it that way. So I'm a huge proponent of technology. It does amazing things. We just have to make sure we're clear on our base for. With strategy with process, with governance, with all of the hard, heavy lifting. And then when you put it into technology, it's amazing.

You can turn it around. 

Trond Arne Undheim: It's amazing. But I guess it also speaks to the value prop of that technology. That's flexible because if you do get stuck in these massive contracts, God forbid, yes, it could be efficient, but you have to change. Your organization takes three years to implement. And if you have to implement it in a smaller factory that you bought in some other country, now you're stuck because your approach doesn't say.

Do these smaller sites. So there's a lot going on here. We're not going to be covering all of it, but I'm just kind of curious as a sort of a last comment, if there's anything else we haven't talked about, you know, forward-looking on pricing strategy, what are some of the things people should keep in their head?

And [00:34:00] obviously at some point they need to talk to some experts, but what are some things, you know, high level that people should be left with? 

Lydia M. Di Liello: So high level start with your strategy. Is it really defined? Where is it folklore that everyone believes is true, but no one has proven is true and no one has really signed off on and at all levels.

Secondly, when you're looking at technology, make sure it's extensible, make sure it's scalable. Make sure it's flexible to your point, because if you buy something that only. The corporate need, when you go to scale, it falls apart. And so you need something that can be changed in weeks, not in months. And I think that's critically important and don't expect that your technology is going to be as inexpensive as it appears at first glance, because while subscriptions have come down, implementation is still implementation.

And the things we don't really know till we dig into. This is just kind of a shared warning of best practices. You're going to spend more than you think you are. So, [00:35:00] 

Trond Arne Undheim: but yeah, I'm always so impressed when I talk to people that have made these incredibly smart choices. For example, pricing seems to me like it's recession proof.

You're like you're equally popular in boom and bust cycles. That is a very intelligent move. I congratulate you even on that very excited to talk to you about these things. Then pricing can be. 

Lydia M. Di Liello: It really can be. And it Trond. Thank you so much for the opportunity to talk about it. I wish every company would take the time to look at this because it makes such a difference to their bottom line.

And it's really small tweaks. It's not turning the business upside down, but it's being aware of making small changes. That makes a huge difference to the bottom 

Trond Arne Undheim: line, small changes. That's what we're going to do. Thanks so 

Lydia M. Di Liello: much, Lydia. My pleasure. Trond thank you for the opportunity. You're welcome. 

Trond Arne Undheim: You have just listened to episode 54 of the Augmented podcast with hosts through Narnia inhaler.

The topic was industrial pricing strategies, and our guest was Lydia DVLO, CEO, and founder of capital pricing consultants. [00:36:00] In this conversation, we talked about how pricing is an important factor considering the changing nature of industry. My takeaway is that. Often underestimate the strategic role of pricing in determining industrial developments, new entrance, exciting business models and testing and or scaling.

I am not surprised that there are prices subs because the area is. And you need both data and experience to believe the future of pricing is undoubtedly influenced by ever evolving analytics about the purchase habits of people in business, but is also shaped by the X-Factor. So the emerging future at the end of the day, pricing is a high priority leadership topic, but also one that will be shaped by specialists.

Thanks for listening. If you like the show subscribe at Augmented podcast.co or your preferred podcast player. Five stars. If you liked this episode, you might also like episode 41 [00:37:00] scaling software movements, episode 50, the last mile or productivity or episode 49 lean manufacturing in the U S hopefully you'll find it.

Awesome. These or other episodes do let us know by messaging us because we would love to share your thoughts with other listeners. The Augmented podcast is created in association with the connected frontline operations platform. The people, the machines, devices, and all the systems use and the production of logistics process, physical location two is the marketizing technology and empowering those closest to operations to solve problems too.

Like. You could find to please share this show with colleagues who care about where the industry and especially where industrial tech is heading fitness. Social media is easy. We are Augmented pod on [00:38:00] LinkedIn, on Twitter, on Augmented podcast, on Facebook and YouTube. See you next time. Augmented industrial conversations that matter.

Lydia M Di Liello Profile Photo

Lydia M Di Liello

CEO and Founder/Advisor/Speaker/Author

Capital Pricing Consultants increases clients’ profitability through strategy monetization, operational, and tactical solutions.

Lydia M Di Liello, CEO and founder (with more than 25 years of business leadership, supply chain and global pricing expertise) delivers exceptional results through Strategy, Process, and Technology. Leveraging a career at General Motors and b to b manufacturing in Supply Chain and Pricing management, client profitability typically increases from 15%-300% in as little as six months. Client engagements range from global Fortune 500 to smaller privately held firms.

Starting with strategic overview through actionable specific directives, clients achieve significant profit increases. Executing widely respected trademarked methodology including Discovery, Assessment, and Recommendations, D.A.R.  delivers a comprehensive roadmap for clients’ corporate strategic goals through operational impact achieving strategy realization.

Lydia is a well-know and widely respected speaker leading executive forums, conferences, and workshops worldwide; she is published frequently in trade and professional journals. With an MBA from Youngstown State University Di Liello is repeatedly requested at corporate retreats and is a member of the Professional Pricing Society Board of Advisors.

Recently published In Manufacturing Today June 2021 https://manufacturing-today.com/news/seamless-connections/

Di Liello was just named as the only pricing consultant with the prestigious 2020 PROS to KNOW award for the second year in a row from Supply and Demand Chain Executive on March 17, 2021

Company Philosophy: Success starts with open and clear communication through every step of the client engagement process. Valuing clients’ time and commitment, Capital Pricing Consultants are dedicated to efficiency and demonstrable efficacy. Di Liello cultivates long-term relationships built one successful project at a time.