Value-based pricing: Still worth the trouble?

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In the face of rising commodity prices, it’s tempting to make the break from value-based pricing in favor of a simpler approach. But is that really the most effective response?

There’s no way around it: the prices of commodities are rising, seemingly with no end in sight. The result is that many companies are feeling the pinch when it comes to pricing. Raising prices may stir up a backlash that can leave the business hobbled. But standing by and hoping for a desired outcome while prices continue to rise can chip away at margins until nothing’s left. Are indexing, surcharges and fees an effective response to the rising cost of commodities?

Here’s the debate:

Value pricing is too complex for us to deal with now. Just tie it to an index and let’s move on.
Even if we could master a value approach to pricing, it would take more time than we have. There’s also value in clarity, which is what indexes, surcharges and fees can deliver.Indexing is just going to move the complexity somewhere else – like sales.
Indexing is easy enough on paper, but think of the impact it may have on other parts of the business. Is your sales force ready to handle it?Indexes, surcharges and fees only put more focus on cost.
Focusing on cost comes at the expense of our ability to sell value. If we give that up now, it may be gone forever.We already sell on cost. What does value have to do with anything?
Hello? Cost is already the subtext for every sales conversation we have. Value pricing doesn’t apply to us.Switching to surcharges and indexes is only a short-term strategy.
Plus, it can hinder your ability to grow, even as it introduces new risks (such as price volatility). That’s not worth it, no matter what the short-term benefits are.If we don’t figure this out in the short term, the long term won’t matter.
We need to solve our pricing issues now – particularly rapid increases in commodity materials – so that we can move on to other issues.Indexes and surcharges result in too much transparency.
Do we really want to give customers and competitors a clear window into how we price? We shouldn’t give up that control.Since when is transparency a bad thing?
Does linking prices to an index or adding surcharges and fees really leave us that exposed?We don’t have the brainpower to make value pricing work.
We can’t all be Olympic gold medalists. Let’s stick to what we’re good at.Nobody is great at this today – so value pricing can give us a leg up against our competitors.
That doesn’t mean we should just wave the white flag and move to indexing, surcharges and fees. Our competitors certainly aren’t. And when they get great at value pricing, they’ll eat our lunch.

Julie Meehan, Principal, Deloitte Consulting, LLP

First things first. This isn’t necessarily an either/or proposition. Indexes, surcharges and fees have their place – often right alongside value pricing strategies. There are probably some products in your portfolio where index-based pricing makes a lot of sense.

But…

I’ve seen companies take an overly enthusiastic leap to indexing, only to find that they’ve given up options along the way. Don’t get me wrong, the relative simplicity of indexing can be refreshing. But relying too heavily on indexing, surcharges and fees can result in a significant loss of control. Suddenly your customers are able to see the elements of your pricing strategy much more clearly – which means they’ll likely start maneuvering to take advantage of it quickly. And what happens when commodity prices slip? Customer expectations may shift just as quickly, possibly leaving you in a less desirable spot than before. There’s just some inherent risk that comes with the territory in indexing.

A key to leveraging value pricing is having a clear understanding of the differences between the cost and value components of your price. From there, you may be able to find some components of your price that you can tie to an index, or cover with surcharges and fees. But what’s left is a real competitive advantage for you – if you manage it correctly. Value pricing is still one of the most powerful ways for companies to keep their edge, even in the face of rising commodity prices. And despite many reports to the contrary, it’s not rocket science.

Don’t give up on value pricing when the going gets tough. Dig in.

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Eagles players are still slowing down the Chip Kelly offense

Posted by Mike Florio on September 18, 2013, 5:17 PM EDT

AP

As Eagles coach Chip Kelly tries to maximize the performance of his no-huddle, hurry-up offense, he needs maximum cooperation from his players.

So far, he’s not getting it.

Before Sunday’s unexpected loss to the Chargers, Sal Paolantonio of ESPN reported that Kelly has instructed his players not to leave the ball on the ground after a play but to hand it to an official.  During Sunday’s game, Kelly’s players consistently left the ball on the ground.

The biggest culprit was running back LeSean McCoy.  Based on a review of the full game broadcast, McCoy left the ball on the ground at least 10 times.

At one point in the second quarter, McCoy flipped the ball to the officials after a play.  Soon after that, he left it on the ground, stopped, retrieved it, and gave it to the officials.

If the change was the result of being reminded about it on the sidelines after consistently failing to give the ball to the officials during the first quarter, it didn’t stick.  He quickly resorted to leaving the ball on the ground after a play.

Others who left the ball on the ground at least once include running back Bryce Brown, receiver DeSean Jackson, quarterback Mike Vick, and receiver Jason Avant.

While it doesn’t create a major delay, every second counts in Kelly’s go-go offense.  And for Kelly, who wants the system to run a certain way, it has to be maddening that the guys aren’t doing what they expressly have been told to do.

It’s unclear when they were first told to do it this way.  Either Kelly has been harping on it throughout the offseason program, training camp, and the preseason and they continue to ignore him, or he has just realized only recently that time was being wasted by leaving the ball on the ground instead of getting it in an official’s hands.

Regardless, the Eagles could be getting even more plays called if the players start doing what Kelly wants them to do.

It’s unclear how many more snaps they would have had on Sunday against the Chargers.  As it stands, Philly had only 58.  San Diego had 79 plays from scrimmage, despite often draining the play clock in a no-huddle approach while quarterback Philip Rivers made changes based on the pre-snap look.

The Chargers ended up having the ball more than 40 minutes, too.  Kelly has said that he’s not concerned about a 40-20 split, as long as the Eagles get their snaps in.  On Sunday, it was less like the UCLA game Kelly mentioned in August and more like the far bigger NFL game in which the Buffalo K-gun offense was stymied both in time of possession and snaps by a grind-it-out Giants team.

While the Chargers did much more throwing than grinding on Sunday in Philly, they came up with an approach that others surely will copy in the coming weeks.

Starting on Thursday night, when the Chiefs and Andy Reid come to town.

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Boston Pads Highlights Reasons Why Buying a Home Is Still a Good Idea

    PHILADELPHIA, PA, August 08, 2013 /24-7PressRelease/ -- As an informative online resource regarding residential real estate within the Boston area, Boston Pads has kept a tight watch on the local market and its reflection of national trends. Although the housing market has significantly improved in recent months, this company explains that many buyers are still shying away from making a purchase. Now, with increased in fixed mortgage rates, many individuals are reconsidering their plans to buy a home.

A recent article from Fox Business assesses how national trends are impacting consumer purchasing decisions, and why it may still be a good idea to buy a home. Boston Pads notes in a recent press statement, "Many consumers react to national trends adversely without first investigating how it will specifically impact their financial situation. For some, buying a home is still relatively affordable--especially in comparison to pre-recession prices--and may even save money over renting."

Fox Business observes, "...while higher rates do mean an increase in monthly mortgage payments, experts are urging potential home buyers not to resign themselves to renting for the next few years just yet--it's still a good time to buy a home. These moderate increases in payments may still be manageable, particularly if buyers look at less expensive properties, or negotiate a lower price. For example, the difference in monthly payments for a $200,000 home at 3.9 percent and one at 4.5 percent is just $70.03. If budgeted correctly, this could be a manageable expense."

However, Boston Pads explains, "Time is of the essence, especially now as the economy is rapidly improving. While many new housing projects are going into development, employment is increasing and additional consumers will likely enter the market--making it more competitive to get the home you want, especially in metropolitan areas like Boston."

With a similar observation, Fox Business explains, "This is the early stage of the recovery of the housing market, and the rising interest rates encourage potential home buyers to be more decisive, and act quickly. As more homes are bought, supply decreases, so prices may rise even further. So if you've been thinking about buying a home, don't lose your confidence, but it may be prudent to act quickly as rates continue to rise."

Noting that many consumers may be looking to secure a home in upcoming months, Boston Pads encourages all those moving within the Boston area to look at available homes on its comprehensive database.

ABOUT:

Boston Pads is an online resource for buyers, sellers, landlords, renovators and anyone else seeking real estate and housing needs in the Boston, Massachusetts area. The company's real time database is the largest in the area, constantly updating technology with current listings. There are a variety of resources available, including property management services, landlords, relocation services, renovation and remodeling services along with several other connections and tools. There is a mortgage calculator available as well as data on specific neighborhoods. Boston Pads prides itself on supplying individuals with relevant, convenient services and resources, offering tips on how to get approved for financing and many other topics.

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Word of Mouth is Still the Best Way People Find Rented Property

    ESSEX, ENGLAND, August 10, 2013 /24-7PressRelease/ -- The tops three ways of finding a property to rent have been revealed by landlord insurance specialists Cover4LetProperty (http://www.cover4letproperty.co.uk), who carried out an independent survey* to find out about renters' habits.

The study highlighted how:

- nearly a fifth (18%) of people found rented accommodation via friends and family;
- 14% found a property using letting agents;
- 12% used a website to find their rented home;
- male renters were nearly four times more likely to choose a property based on a recommendation from friends and family, compared to female renters (23% vs 6%);
- overall, 18% of those questioned rented the second property they saw;
- 24% of male renters were most likely to view two, or more than four, properties before they found one they liked;
- over one in ten of their female counterparts (12%) picked the first home they viewed with the rest viewing two or three properties before they found one they wished to rent;
- 36% of respondents who rented the first property they saw are in the 30-39 age band.

Richard Burgess, Director at Cover4LetProperty, commented: "In this modern era of technology, it is very surprising that people looking for rental property are still finding it on the grapevine first, rather than online. And when it came to trust, it seems that blokes still tend to trust their mates more as opposed to our female counterparts. Conversely, when it came to being picky, men did look at more property than the women did before choosing."

*Independent study carried out for Cover4LetProperty July 2013 by Usurv

About Cover4LetProperty

With roots going back to 1946, our clients can benefit from 66 years' of experience in the landlord insurance marketplace. We are award-winning independent intermediaries and act on behalf of our clients in arranging their buy to let and unoccupied property insurances. Our service includes advising clients on their insurance needs, arranging insurance cover with insurers to meet those requirements and help with any ongoing changes that have to be made to their landlords insurance policies.

In 2011 we were proud to beat off some stiff competition for the award for Best Landlord Insurer in the prestigious The Money Awards.

---
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Many Early Tax Filers Still Waiting for Refunds

More than three months after rushing to file their taxes early, some filers still haven't received refunds from the IRS.

Taxpayers claiming education credits on Form 8863 encountered their first delay when the IRS said it wouldn't be able to start processing the forms until mid-February because it needed to update its systems. Then, on March 12, the IRS said several tax software providers erroneously filed more than 600,000 returns containing the 8863 form --resulting in delays of up to six weeks from the date they were filed.

That meant most of these filers were expecting refunds by the end of March or beginning of April at the latest.

But since then, hundreds of angry comments have been posted on Facebook and other online tax forums from filers who claim they still haven't received their refunds.

"Sooooo effing angry!!!! Still processing three months now no update," one member of the Club 8863 Facebook group wrote last week.

"Still waiting I've had no changes since feb. starting to getting mad bc I was told I would definitely have it by April 22 and then that changed to May 6. And now nothing," wrote another filer. Another woman said her electricity was going to be shut off unless she gets the money soon.

Jolee Singleton, from Lakeland, Fla., filed her taxes on Feb 14. She said she made sure to get them in as soon as possible because she needed the $1,000 refund for rent and car payments as she searched for a full-time job. But after calling the IRS every week to check in on the status, she's still waiting. In the meantime, her truck was repossessed because she couldn't keep up with payments, and she doesn't start her new job until next week.

"When you owe the government money they want it right away. When they owe you money, they are not in a hurry," she said. "I have almost lost my house too, and will soon if I don't get my refund."

H&R Block, one of the software companies that acknowledged it was encountering issues filing returns in March, said in late April that 90% of its impacted customers have now received their refunds. The 10% who still haven't may have been flagged by the IRS for other reasons, the firm said. To apologize, it sent $25 vouchers to impacted customers who filed in H&R Block-owned locations.

But that's not enough for some filers -- even those who finally did receive their refunds. Kathleen Fisher, who has been an active member of the Club 8863 Facebook group and helps taxpayers get in touch with local officials and the Taxpayer Advocate Service, the watchdog arm of the IRS, said people paid hundreds of dollars in tax preparation fees so getting a mere $25 back is an insult.

Some taxpayers' filing fees have already been put into collections because they aren't able to afford them without their refunds, while others took out refund anticipation loans and are paying steep interest as they wait for their refunds -- which they needed in order to pay off the loans, Fisher said.

The IRS wouldn't say how many Form 8863 filers still haven't received their refunds, but it said a small group may have been impacted by additional issues that the IRS was continuing to work on -- and that these returns have finally been processed.

"A small additional set of returns with education credits cleared our review process in recent days. As a result, these taxpayers should start seeing their refunds or refund dates shortly -- assuming there are no other issues with their tax returns," the IRS said in a statement.

As these people anxiously watch their mailboxes or bank accounts for that direct deposit from the IRS, nearly 98 million taxpayers have already received refunds, according to the latest IRS filing statistics. The IRS says that most refunds are issued in less than 21 days, and the average refund is $2,657 -- down slightly from last year's average refund of $2,716.

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Court Hits Homestretch With Big Cases Still On Deck

As she summarized the first opinion of the day on Thursday, Justice Elena Kagan said it involved the Armed Career Criminal Act and joked that it was "possibly not what you're here for this morning."

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Daily Routines of Smaller Firms Still Bedeviled by Storm

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Ahead of the curve: but bendable screens still seek breakthrough

By Jeremy Wagstaff and Sinead Carew

SINGAPORE/NEW YORK, April 14 | Sat Apr 13, 2013 11:48pm EDT

SINGAPORE/NEW YORK, April 14 (Reuters) - The touted arrival this year of wearable gadgets such as computer displays strapped to wrists and in wrap-around glasses is just a step towards a bigger revolution in screens - those that can be bent, folded and rolled up.

Once freed from today's relatively heavy, breakable and fixed glass displays, tomorrow's devices may look very different, with screens that can be rolled out, attached to uneven surfaces, or even stretched.

But there's still some way to go.

"It becomes a product designer's paradise - once the technology is sorted out," says Jonathan Melnick, who analyses display technology for Lux Research.

There is no shortage of prototypes - South Korea's Samsung Electronics this year showed off a display screen that extends from the side of a device - but obstacles remain: overcoming technical issues, figuring out how to mass produce parts cheaply, and coming up with devices compelling enough for gadget buyers.

Screen technology - and the global small display market is seen more than doubling to around $72 billion by 2016, according to DisplaySearch - is still dominated by liquid crystal displays (LCDs), which require a backlight and sit between two sheets of glass, making the screen a major contributor to the weight of a device, from laptops to tablets.

"Most of the weight in a tablet is the glass structure in the display and the support structure around it to prevent it from cracking," said Kevin Morishige, a former engineer at Cisco Systems Inc, Hewlett-Packard Co and Palm.

LCD's dominance is already under threat from lighter Organic Light Emitting Diodes (OLEDs) that don't need backlighting, are brighter, offer a wider viewing angle and better colour contrast - and can be printed onto a few layers.

FROM GORILLA TO WILLOW

Glass, however, is getting lighter and more flexible.

Corning Inc, whose toughened Gorilla glass became the screen of choice for many smartphones, will provide phones with curved glass edges as soon as this year. It is also now promoting Willow Glass, which can be as thin as a sheet of paper and is flexible enough to be wrapped around a device or structure. Initially, Willow will be used as a coating for products like solar panels, but it is eventually expected to create curved products.

A key selling point for Willow is more efficient production which involves so-called roll-to-roll manufacturing, like a printing press, rather than today's more costly batch manufacturing. But the commercialization of Willow as a flexible product is some way off, James Clappin, who heads Corning's glass technology group, told Reuters.

And glass has its limits.

"You can bend it, but you can't keep flexing it," said Adrian Burden, a UK consultant who has worked on several start-ups related to display technology, and holds patents in the field. This means that while glass is likely to continue to play a leading role in devices with curved displays, screens that users can bend, fold and roll will likely be plastic.

But plastic is not as robust as glass. "As soon as you introduce plastic substrates you have all kinds of issues with sensitivity to the environment," says Burden.

BARRIER FILMS, NANOPARTICLES

So while OLED and plastic would seem to be companion technologies they create an extra problem when laid together: they need so-called barrier films to prevent the various layers from leaking oxygen and moisture.

"There are barrier films in all sorts of products, for example food packaging, but the challenge is that OLED is one of the most sensitive materials we follow, and so creates huge challenges," says Lux Research's Melnick.

Singapore-based Tera-Barrier Films, for example, has developed a way to plug leaks in the layers using nanoparticles. Director Senthil Ramadas says that after years of delays the company last month started production in Japan and aims for mass production by end-2014. "You have several challenges in the value chain," he said. "All these things need to be established, and only now is it coming out."

And there's another problem: all the materials in a bendable display need to be bendable, too - including the transparent conductors that drive current through the display. Several technologies are vying to replace the brittle and expensive Indium Tin Oxide (ITO) used in most fixed displays, including nanowires, carbon nanotubes, graphene and conductive mesh.

Some of these technologies are close to production. Another Singapore-based firm, Cima Nanotech, for example, rolls a coating of silver-based conductive ink on a sheet which then self-aligns into a web of strands a few microns across that forms the conductive layer.

It's unlikely such shifts in the underlying technologies will yield products immediately. For one thing, "prototypes can be made," says Melnick, "but that's a long way from mass production as many of the processes and material in these devices face big yield and scaling issues."

ON A ROLL

This is gradually changing, some in the industry say, as production shifts from making parts in batches of sheets to the more efficient roll-to-roll process. "Batch is more expensive and slower than roll-to-roll, which needs new equipment and design - and takes time," said Ramadas at Tera-Barrier.

All this requires money, and manufacturers have to be convinced to invest in the new equipment.

Even after the success of Gorilla Glass, popularized by the Apple Inc iPhone, Corning is having to work hard to prepare customers for Willow displays. Clappin said customers want thinner devices and easier to produce glass, but Willow requires a completely different manufacturing set-up.

"When we talk about commercialising Willow a big part of our development activity is enabling the ecosystem to handle what is essentially a brand new material," Clappin added. "Nobody's accustomed to working with glass that bends and moves. It's a new material. The ecosystem needs to be trained to handle it."

He sees demand, particularly from video gamers, for Willow-based curved screens, but remains less convinced about rollable or foldable screens. "Conformable is in the near future. As far as flexible, bendable, fold-upable goes, I see that further out and I'm not even sure that's a viable product," he said.

That in turn requires figuring out what end users might want. "For us and for our clients it's not so much about the flexible display technology," says Brandon Edwards, Shanghai-based executive creative director of frog, a design company owned by India's Aricent. "That's a huge part of it, but what are the practical ways we can bring products to market and how fast, and what's the right cadence? What are consumers going to be responsive to?"

WHAT DO PEOPLE WANT?

For companies with deep pockets, like Samsung, this can mean building prototypes such as those displayed at international technology shows. But that doesn't guarantee success in selling products. Sony Corp, for example, promoted flexible OLED displays back in 2007. "Six years later they've not come up with anything," says Zhang Jie, senior scientist at Singapore's Institute of Metals Research and Engineering. "If Samsung's going to really drive this the application really needs to drive people and make them want it."

This slows down the process. In late 2011, Samsung told analysts it planned to introduce flexible displays into handsets "some time in 2012, hopefully the earlier part than later", but a year later the company said the technology was still "under development." In an investment note last month Jefferies said that while Samsung may introduce "unbreakable" screens this year, it didn't expect to see flexible displays in Samsung devices until 2014-15.

Ultimately, teasing out the technical problems may be only half the battle.

"This is the eternal question of the speciality materials industry," says Lutz Grubel, Japan-based head of marketing for German glass maker Schott's Xensation Cover 3D glass. "You have something, a material, and you're looking for an application. That's the game."

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