Episode: 318 |
Avy Punwasee:
A Pricing Case Study:


Avy Punwasee

A Pricing Case Study

Show Notes

Avy Punwasee is a Partner at Revenue Management Labs, which helps clients develop practical pricing solutions that deliver sustainable revenue and profit growth.

In this episode, Avy walks me through a detailed case study of a pricing project for an aftermarket auto parts manufacturer.

Learn more about Revenue Management Labs on their website: https://revenueml.com/

One weekly email with bonus materials and summaries of each new episode:

Will Bachman 00:01
Hello and welcome to Unleashed the show that explores how to thrive as an independent professional Unleashed is produced by Umbrex, which connects you with the world’s top independent management consultants. I’m your host Will Bachman. And I’m excited to be here today with Avi Pon yc, who is at revenue management labs. avi, welcome to the show.

Avi Punwasee 00:24
Thank you very much. Great to be here.

Will Bachman 00:27
So Avi, let’s start at the top. So help teach me a bit about what is revenue management. I’ve heard this term, specifically in kind of applied airlines as they dynamically adjust their fees, and manage both, you know, revenue and yield and hotels. But I know it’s a broad topic. So help me explain understand how you think about the term revenue management?

Avi Punwasee 00:53
It’s a question we get a lot. And the go to answer that everyone clicks on is saying, okay, it just has to do with pricing. But it’s wider than that. And usually, where we like to start is thinking about running a lemonade stand. And all the questions you need to answer if you’re running a lemonade stand, so you could start to think about what price should I sell my lemonade at? What kind of cup sizes Should I offer? Should I have multiple flavors? what time of the day should I operate? Should I start to discount my inventory throughout the day? And they all How should I plan? Now, as you’re thinking about this simple lemonade stand that we’re running the, it gets pretty complicated, really quickly, on all these questions, these finite questions that you’re trying to answer that are discrete, but they’re all related to one another. How we try to describe revenue management, is looking at the answers to these questions. And when you look at the answer to these questions, and you jigsaw them together, you might not be optimizing the answer to each of the questions. But when you put the question together, you’re optimizing the total result. So you’re driving the most revenue and driving the most profit. And as you think about that, there’s really four buckets that those questions are falling into. One, where your price is. And when you’re thinking about your price, you’re really thinking about what value Am I delivering to my customers, and you’re looking at that value, versus the next best alternative. And that next best alternative could either be within your offering, or it could be the competitive market. That’s kind of the first big bucket. The second bucket about is volume. And it’s all about how what are the ways that you’re going to go about trying to generate volume. So you can do that with elements, such as investing with different customers, and that investment goes, you can think of it as marketing that give it a price discount it give it a special pricing, you can think about it as customer programs, all those things we do or the investments we make into the market to drive volume. The third pillar is around mix. And what mix, it’s a complicated term. So I’m going to try to simplify this one. It’s just looking at the different offers within your portfolio. And how can we and obviously you make different money on different offers, thinking about what you can do with presenting that offer portfolio. So you can encourage customers to go to your higher margin items. And as you shift that demand, you’re causing natural revenue growth and natural profit growth. And then the last element, which really gets to how you’re executing those three elements, price, volume, and mix is execution. So having the organization enabled, that they can properly take that message to market. So if you’re going out there and you’re executing a price adjustment, you have great selling stories that the team can execute on or if you’re working plans with customers, you’re going through some joint business planning that you’re helping them understand what you’re doing and why it makes sense for them at the end of the day. So I apologize. Well, I know that’s a really long winded message. But it’s it’s not necessarily just plugging a bunch of data into a calculator like the airlines and the hotels are doing it and cranking out hay on this night. This is what we’re going to charge for this room, it’s really boiling back to three or four big buckets. One, what you’re going to do from your price to what you’re going to do from driving volume three, what you’re going to do to drive mix of the purchases that are going on within your portfolio. And the last element is execution, how you bring all this to life and how you actually get that executed in your offers and executed to your customers in the market.

Will Bachman 05:35
Fantastic. Could you walk me through an example. And as real as possible, you know, maybe it’s a real client example that you can sanitize of the client name. But walk me through an example. I’d love to hear sort of end to end on a project, how you would you know what phase one looks like, you know, collecting information, understanding objectives, and then how do you go through this? There’s so many different variables and dimensions. I’m quite curious to hear how you think about doing it in a practical way, right, because there’s, you know, brollies an infinite number of possible moves. So how do you model it use Excel? So just just walk us through a project, what we would see, you know, if we were working in your team room and watching what was going on?

Avi Punwasee 06:25
Yeah, sure, no problem. So I can give you an example. I’ll pick a recent example. So this was an aftermarket automotive parts manufacturer. And basically how their pricing was driven was, they would look what’s happening with their commodity costs. Or they look what’s happening with tariffs. And based on those moves, it would drive their pricing strategy. And also, if they were procuring those parts, not necessarily manufacturing them from third parties, they would look at what’s happening for their from supplier costs, as they’re coming in, and they’d adjust their pricing. So it’s basically the traditional cost based pricing, they would look at all their costs, they were incredibly good at looking at their costs, they would bang bang on a standard margin, and they’d arrive at their price. What they were finding was that they were losing a significant amount of volume. And they were finding that customers were walking away from them in some instances, and D listing their products,

Will Bachman 07:35
D listing, wow. And this was an example of, they’re not making something that’s so unique, it sounds like they were making something that there were some other similar companies making this after market product, after market Exactly.

Avi Punwasee 07:48
And their competition was coming from two areas, one, they were selling through Amazon and whatnot, but they were selling through retail channels. And they were also selling through distributors. And what they were coping with was, there was a lot of imports that were coming from overseas that were extremely cheap. But retailers just kind of in the past five to 10 years, they were starting to introduce their own private label products. And they were competing. So they were holding their branded products kind of up here high. And then they were introducing these private label offerings. And they were aggressively pushing their private label offerings. And it was starting to cannibalize sales. But some of these private label offerings were becoming so dominant, that the retailer themself was saying, You know what, I don’t even need to carry your brand anymore, or you’re no longer relevant to me in certain areas of your portfolio. So as we were looking at what they were running into the issue was is, hey, we can just go ahead and cut the standard margin, but we’re not really sure how far or what we should do, or where we really need to be positioned. And that’s where they came to us. And the first step that we took, was to start to understand one, what is our position within the market? So it’s, it’s nice having dealing with vehicles, because there’s a lot of data available. And there’s solves if you don’t have this great visibility on data. But with vehicle data that’s out there. We know how many vehicles are running around in the market. We know how often those vehicles are getting repaired for certain types of repairs. And we know how many on average, how many parts per job are being used. So by doing the math, you can you can understand what’s the total market size out there. And we were also able to understand, we knew how much they were selling. So very quickly, we could look at the portrait Yo, and we could take a look at Well, here are some areas that were really under index. And here are some areas that were incredibly strong. The next thing that we did was, as you can imagine, auto parts, sometimes you’re dealing with a portfolio with hundreds of 1000s of parts, it’s huge. So, cost plus makes a lot of sense to price in that manner. Because it’s simple. You just have a cost, you do a calculation on it, and you’re done, your price is done, and you’re not having to go through product by product. The problem is, and this spreads for whether it’s a product or it’s a service, some of the products that you make are commodity. So you’re right, I wouldn’t be able to tell the difference. If it’s a private label product. If the branded product, there’s there’s really no differentiation. And in those cases, it’s just a market based pricing, you might be able to command a couple of points for value differential because I can get you the part there quicker than everyone else, or I’m stocking in a certain level. But, and then some parts are incredibly differentiated. Hey, this it, we’re later on in the product lifecycle, I’m the only one who’s stocking it, I have special technical competency within this part, it has a high failure rate on this part, or it’s an incredibly difficult repair. I’m not gonna mess around with a private label part. Because if I go and use that private label part, and it takes me eight hours of labor, and I have to replace it again. It’s just not worth it. It doesn’t make sense to me. But critical on that is there’s all these different value differentiating attributes around these parts. So what we did was we spent some time segmenting.

Will Bachman 11:53
Yeah, just a question here. And are we mainly talking about parts that a mechanic would buy? So a shop would buy? Or are we talking about things that individual consumer would be purchasing from AutoZone or something?

Avi Punwasee 12:08
Both so and it differently, so some of it was the repair shop buying and some of it would be the do it yourself, do yourself or walking into an AutoZone, I’m going to go and pick up this filter, and go and put that onto my car. So again, that Dallas’s additional wrinkle on it. So based on that, hey, if we’re selling the same amount to the repair shops versus a customer, a do it yourself customer, it’s going to necessitate a different price, a different pricing strategy than if it’s all going through the repair shop. Now, what’s kind of critical to that is, as we’re talking about all these different behavioral attributes, so I have these items that are really old, really old vehicles. So these items that really do it yourself are using are these items that are more commodities, we’re just talking about segmentation, really, how do we look at like items, and bucket them together? So then the next piece that we did was, we took the entire portfolio, and we started to create these buckets of parts. And the buckets of parts sat together, because they exhibited, likewise, behavior ALM and so we see it’s primarily do it yourself, we see that there, it’s for older vehicles, we see that we’re basically we see that we have this competition, we see that we have these price elasticity on these parts. Now, with developing these buckets, you know, we’re going from 300,000 parts. Now we’ve got kind of 20 buckets, what we can do is buy each of these buckets, we looked at each we looked at each of those buckets, and we said okay, well, how are we standing from a market share perspective? How are we? What’s our price gap versus the competition? What’s our price elasticity on this part grouping? And we can start to do some modeling and understand if we were able if we were to increase the price, how much incremental volume could we expect? And with that incremental volume, does it make sense from a profitability standpoint? Do going through each of these 20 buckets? Yeah, we were able to develop 20 unique price strategies

Will Bachman 14:35
to mechanics care about the price like at least my mechanic I think probably just sort of does marks it up to me maybe I could imagine something, you know, odd where they might actually prefer higher price parts because well, if they just have a standard policy of marking it up 100% to the customer. The more they pay, the more the more profit they make.

Avi Punwasee 14:57
That that is a great point and You know what, definitely in certain product groups, that’s that’s exactly it, you know what we are, I can see that our product is 90 80%, above the private label competition or any branded competition, I have 95% of the market share. And it’s exactly that, you know what, I’m the brand, it’s a highly critical repair, and a mechanic is going to make more money, actually installing my part where the issue was starting to come at was the mechanic was buying through a distributor. And the additional wrinkle comes into the system and that the distributor, sometimes the dollars that are making off of a private label part, versus selling a branded part from a supplier, it’s a different fight, they could be making more off that private label. So they’re pushing the private label very hard. And incenting mechanics, in some instances, to go ahead and buy the private label over and above the branded. So it’s starting to understand how to think about those different channel dynamics. How do we structure our price, so when it’s presented to the mechanic, and they so a mechanic signs on to, you know, a Napa website, and they see here’s where I can buy the Napa kind of blue box product for? Or here’s where I can go ahead and buy the branded product for an understanding really, where’s that differential? Where the mechanical go? Yep, I’m going to go with that branded product, or, you know, what the the differences to substantial, I’m going to go with that private label product that’s being pushed at me.

Will Bachman 16:49
How we’re, I’m sorry, I don’t want to get us off track too much here. But where do mechanics typically buy? The parts? Like? Do they buy them from the same kind of retailers that that you and I would buy them for our own car? Or there? Is there like a whole hidden separate world of distributors that sell just to mechanics that we don’t even like know about that are not really like name brands that I would even know exist?

Avi Punwasee 17:14
Yeah, so there’s kind of two tiers, there is exactly that whole separate world who there’s a lot of purely automotive distributors out there that the selling to these repair shops, and then it then you’d see the the names, you would recognize the retail names like the Napa, the AutoZone of the world, the O’Reilly’s, who not only sell to the Do It Yourself customers, but they’re going out there, and they’re going to conquest, those repair shop customers as well. And it’s a battle between the traditional distributors and the retail, those new kind of retailers that are out there that are enrolling on that that are fighting for that business. And of course, as you can imagine, the price has a lot to do with that battle right now.

Will Bachman 18:07
Okay, great. So that helps orient me a little bit in terms of the market we’re talking about. So, so these are after aftermarket parts for auto. And my guess would be that, like, most of the dollars are probably selling it to the shops, I would I would think, is that right?

Avi Punwasee 18:24
Like, you’re very, it’s probably at 20. Yeah, you’re with with the split. Yeah,

Will Bachman 18:30
yeah. I mean, I don’t go out and buy like brake pads or new catalytic converter myself and install it. So I’ll be lucky to change the, The wipers on my car. I’m in the same boat. Exactly. I’ll admit. Okay, so, so you’re doing this, this look, and I love this interesting idea of how you put together like 20 different categories, based on the kind of buying behavior of it is, is this mostly consumer purchased or purchased at a shop? And when you know, how sensitive is the is the is the pricing of it? Is it so and like, what’s our cost? So you’ve come up with all these categories. Okay, keep keep going keep walking us through, I got you off track.

Avi Punwasee 19:17
Also, the one element that the organization wasn’t working very closely at all was looking at where competition was. And there were certain products that we were looking at that we looked at where the competitive market was positioned, and we looked at what we were buying that product for. So we might have been buying a product from a third party, we’re actually buying it from a third party higher than what competition was selling at. So there were some products that were like, oh, we’re This is a whole different problem than pricing. It’s more of a supplier procurement problem that we need to figure out. But looking at coming up with those 20 pricing strategies with each of those groups. We came up with unique pricing strategies for each. And we modeled that all out using the using your plasticine, we modeled that out from two perspectives. Not only did we model it out from an internal perspective, which is important, but exactly where you’ve been going already, in order to get the price that we charge to the customer is one thing. But where the rubber hits the road or where the poll actually happens is when there and customer looks at that, when the repair shop looks that they are making an order and choosing what products they’re going to get. It’s that price that the retailer or the distributor actually needs to affect. And what was happening over time is, in the past, since this manufacturer had really just been pricing based on cost. Well, their customers had gotten smarter. So they were going ahead and they would go and say, you know what copper and corrugated is up by 2%, we’re taking a 2% price increase right across Well, when they go into, they change their price into their customers, they’re going well, on part Group A, were they took 2%, I’m going to take 6%. So over time, the channel that they had been selling into had margined up significantly. So the next challenge was, is we knew where we wanted our pricing to be positioned. I’m sorry, I don’t we also mean that term market do promote,

Will Bachman 21:34
can you turn the term margin up? So you’re saying they’re competitive, their competitors, prices had gone up more than theirs, I don’t understand the margin piece.

Avi Punwasee 21:44
Oh, no problem. So I apologize. So basically, if I was, they were selling it into a product into a store $2, the store goes ahead and take some margin on it of $2. And then the store sells it to $4.10. And customer. What had happened was, let’s say I take my price from $2 $2.10. So I took a 5% price increase. What we would expect is, you know what, if they want to maintain their same margin, they would go ahead and say, Okay, I was only $4, I’m going to go ahead and increase, take a 5% price increase as well as my $4, a vote of $4.20. So, you know, I’m making a little bit more money, because it’s a higher out of pocket. But what was happening, instead of going to $4.20, they were going to $4.50. So they were making much more as the they were passing much more price to the market. And this had been contributing to a little bit of where the pricing versus competition had gotten out of sync as well. So now we had these new price targets that we wanted to do on these 20 categories. What we really transitioned into was going customer by customer, item by item, looking at where that customer had that product priced, where we wanted that product to be priced. Looking at if that customer brought their price down to that level, how much volume they could expect to pick up and showing, building sell stories, basically, that we go into customer and say, Hey, in the past, we were paying a pricing based on cost, it didn’t really make sense for we weren’t really looking at our competition, we weren’t really looking at the value we were delivering to market. And we weren’t driving the maximum category value that we could to you. Now, here’s our new insights around how we’re looking at our parts. And we want to make sure as a category partner, we can drive value for you. And what we did was basically big account by big account was really going through and building tell stories to show them. Here’s what I where your pricing is right now, here’s where we recommend your pricing going to if you do this, here’s what your financials should transition to. And net net. If you go ahead and take this, take these price adjustments up both up and up where you have leverage down where we see that there’s incremental volume opportunity, you’re going to be net net make more money. And at the same time, here’s the mechanism that we’ll use to track it with you on an ongoing basis. So what was great about that was it’s not only making it very concrete and helping them understand what you’re doing, but it was really starting to talk This supplier into the customer by helping them proactively manage the customer on a quarterly basis and make it much more of a partnership versus a core gets gone up by 2%, your price is going up by 2%. It’s much more. So how do we drive value for both both of ourselves in partnership and help continue to drive category value? It changed the whole nature of that discussion, even though we’re looking internally, and how we could drive the maximum revenue, maximum profit internally, it’s also linked to our customers driving the maximum revenue and maximum profit, and how do we start to work in partnership.

Will Bachman 25:42
So they were working with the retailer to, you know, kind of say, you know, to suggest the actual retail price, and that they were charging the end customer as well, and helping the retailer figure out, there were some places where they should raise their prices, and they can get more margin, but some places where they should really lower their prices. So this product would be more competitive.

Avi Punwasee 26:08
Exactly. And thing about that is a lot of, especially bees, they don’t they they consider their immediate customer. And they’re very close and managing their price. But they’re not necessarily looking at the other steps in the value chain. And thinking about where what value is being created, and where you need to be positioned. But it’s important. So you can understand the if you can understand the entire value chain, you can understand if it makes sense the end customer or not. And then based on that, how do you need to change your price? Or do you have leverage, or do you need to adjust?

Will Bachman 26:50
How did they? How did the retailer’s respond to that? Because I can imagine some I mean, I can imagine two reactions, some might say, oh, wow, this is genius analysis. Thank you so much, we’ll do exactly what you say. And we’ll make more money. And some might just say, hey, we’ll manage our business you manage yours will decide what price to charge. What kind of reaction did they get?

Avi Punwasee 27:15
You don’t want it’s funny, it’s very closely dichotomy that you’re outlining some, some were said right away. I understand. No, we see this in a lot of other industries, or I see this in a while other places, and it’s refreshing, that you’re bringing this to your portfolio and bring this management to the category. Yep, the strategy makes sense. Let’s continue to move in others. We took the opinion, some didn’t understand, like it was literally. And it’s going to take time to help educate them on help. Let me help you understand what we’re doing, why we’re doing it, and why this makes sense for your financial. So it’s honestly helping them understand their financial statements and how they’re creating leverage with pricing to their financial statements. Others took the exact approach that you came at was, know what our price is our business, you guys manage your price. And but at the same time working through that discussion, because helping them understand, here’s what we’re doing with our price, and why we think it makes sense, you still naturally go back to we were able to transition those discussions back to their price naturally. Because they would say, well, we’re not going to accept that price increase or whatnot. And we’d come back to Well, here’s the where the market opportunity is. And they would be forced back into the discussion of, well, we don’t necessarily think there’s a market opportunity there. And here’s why. And it opened up that discussion, the back and forth on Well, here’s why we think there is that market opportunity and to start exploring options like, okay, let’s test on this sample, or let’s have it run within this region, for this time period. And going back that out. So you will have customers that push back and say you know that that’s our business, but it’s it’s a process and just starting that discussion, showing them that you have a good understanding of the market, you have a good understanding of the customer. And it’s very powerful. If you’ve done the math, and you can show them the math with their numbers. It’s it’s hard to debate. Here’s what your numbers are showing us. And here’s where the data is leading us. It makes the discussion much more concrete and objective, then usually what’s happening is more of an emotional discussion without that level of granularity or data behind it.

Will Bachman 29:58
Can you tell us a little bit about how you actually do this calculation. Let’s, let’s assume that I mean, let’s I don’t know what category specifically your client was. But let’s pick something like replacement headlamp. I don’t know. Right? So let’s say okay, so for a certain class of car, there’s probably a certain class of, you know, serial number of headlamp. And there might be some various private label and different manufacturers make it and you can get a different stores. So let’s say that you’ve collected all that information, you have a sense of Oh, right. There’s so many Toyota centers on the road every so often, you have to replace the headlamp every four years or something. 10 years, I don’t know. And so therefore, so many people should be buying them. And you know, what the prices are, you know, your market share. But then how do you actually go about, like, what assumptions are you making? How do you do the calculation to say, Okay, well, if we adjust our price from, you know, $15 to $16. And the final price to the consumer goes from x to y, how do you assume and determine what the volume change would be based on those changes? Because, yeah, I mean, it goes up at AutoZone. But, you know, does that really increase sales? Like, if I walk into AutoZone, I’m not gonna say, Oh, the price went up, $2, I’m gonna go over crosses, you know, like, I’m gonna drive somewhere else a mile away and buy it, they’re, like, price is what it is. So how do you model that volume change?

Avi Punwasee 31:27
Yeah, and there’s a couple, there’s a couple of ways to model that volume change, and really depends on what information is available to you. So in certain instances, when information is not available to you, and this is by no, it’s usually not the case, but you’re forced to go out there, and you’re forced to actually do some research, and you go ahead and present different offers to customers. So for example, in this case, let’s say I had absolutely no data available to myself, he go and put in front of customers that you’re nowhere in the category, and you’d show them a shelf, see what they purchase, then you show them another shelf, move prices around, and you see if it adjusts, if it adjusts what they actually are purchasing. Now, usually where we’re calculating the elasticity, or that volume reaction is using either customer transactional data that’s available to us, or internal transaction data. In this case, because what a lot of industries just don’t have customer data, for example, like retailers supplying back data to them or distributors supplying back data, they usually only have their internal shipment data. So what we do in that instance, is we take a look at an ideally you have somewhere around three years of data, if you have more, it’s great. You’re looking at and this is at an invoice level, here is the part level, here is the price that I sold that part at here’s the volumes that I’m selling against that product. And what you’re trying to do with this data is First off, you’re trying to normalize it. And when I say normalize that data, there’s certain things that are happening in the data that are causing the volume to go up and down. So you’ll have things like seasonality happening, you’ll have things like picking up new customers or losing customers, you’ll have in the in the item of parts that we’re talking about. There’s a natural product life cycle. So you know, if I was putting in parts on a 2002 Camry that as I move a year ahead, well, there’s just less 2002 camrys that are running around out there. So my volume is I might be performing at the exact same level, but there’s just less cars out there. So I’m going to see a natural volume drop off. So we normalize all of that over the data. And we look at what prices, what prices have actually happened in the past and what volume has moved. And we’re looking at this, on a total level, we’re looking at this category level, we’re looking at this as customer level. And going through that analysis, we’re able to drive out what elasticities are occurring by part by skew and by segment. And that really provides the basis to help us understand these groups of parts. If I go ahead and move price on rows, we’ve seen some pretty significant volume shifts. If If I move these parts, I don’t see that the volume hardly shifts. So they’re probably there. Pretty inelastic, we should be looking at taking some price adjustments, slow and steady price increases on these because it’s pretty substantial improvement for profitability.

Will Bachman 35:13
That makes a ton of sense. So then, tell me a little bit about the last step you mentioned when we started out. So for execution, talk to me a little bit about that with with this with this client example.

Avi Punwasee 35:26
Yeah, as I said, in the past, the team was very used to even having a note from their suppliers, saying, Hey, we’re taking a 2% price increase on you, because these core metals have gone up. And then they would walk into the retailers and walk into the distributor, show them a copy of that note, and then say, hey, because they’re taking their price up on it. That’s why we’re taking our price up. Well, this process that I just walk you through at a very high level, it’s a whole new way of thinking, it’s thinking about what value you’re driving to the customer versus the competition, what kind of price gap you need, versus the competition, where you’re going to maximize your volume. So what we had to focus on was, how do we educate the sales team to deliver that message. So we helped put together sell story, educate them on how to think about delivering that and roleplay through delivering that, what kind of objections they’re going to get, and how to handle those objections. as they’re going through that sales process, as they’re getting customer pushbacks How to where we’ll negotiate and what we’ll negotiate on. And doing deep dives off of that. And also from that execution pieces, monitoring that, hey, that price actually got changed in the system, we said we were going to take it to $5, the price got changed to $5, the sales rep then put it in any incremental customer funding on that. And here’s how the volumes coming out. So you’re going through that closed loop process of monitoring and making sure that that oversights in there that there’s nothing that happens on the back end, a lot of times what we see is a companies think they’re out there, they’re going and they’re getting price increases. But by the time they look at their financials, and they see what they actually achieved on the bottom line, it’s evaporated. Now why it’s evaporated it is in a lot of instances, either the price adjustment was in taken or investment, additional investments were made in that customer and other areas, special incentives or programs or terms given that basically spent back that entire price adjustment. So that execution piece is just as important as having the insights and being able to come to good concrete insights. Because if you can’t execute it, you can’t actually make sure that that action was taken at the customer and that the dollars are rolling through on the bottom line.

Will Bachman 38:27
Yeah. Let’s talk a little bit about your firm revenue management labs. So you have you just tell us a little bit the story of it and the size you are today. You have you’re currently have, you know, a number of both full time, folks, and I think I’m not sure if you use some contractors as well. But just tell us a little bit about the history of your firm.

Avi Punwasee 38:48
Yeah, so revenue management labs, we’re a boutique firm for about 20 people. And what we are, our view on revenue management is that revenue management is it’s a discipline, we see it like finance, marketing, sales, it’s just a discipline that companies need to have. And when you look at the leverage that price has on your financial statement. It’s something that’s too big, too for a company to ignore. So you need to have discipline around pricing and knowing how substantial of the leverage it has on your profit. So what revenue management Labs is all about is helping companies build competency in the area of revenue management, being an enabling partner, helping with customized solutions because just like we were talking about before every industries, different competitive sets different how you go to market, how you make commercial different decisions is different. So in order and pricing, I hate to say it, it should be something It’s very data driven. And a lot of organizations, there’s a lot of emotion around it, because you’re affecting people’s sales compensation, because you’re affecting revenue, you’re affecting customers, you’re affecting, you’re basically touching everything when you touch a price. So our key mantra is we want to be an enabling partner to organizations, we want to bring customized solutions. And the last element, which is most important for us, and that I usually harp on the most is that pricing is something that has huge leverage on your financial statements. So we’re incredibly focused on return on investment. So as we look at helping organizations and just because if you’re going to go through the hard work of looking at changing your pricing and getting an implemented, there should be a material change on your financial statements. So being able to track that through and verifying that you were able to see that lift, does two things. One, it shows that you got the good work and the hard work, the hard work actually paid off. But it starts to create momentum within the organizations to start to really drive them down, continue to go down that revenue management pathway, because in a lot of organizations, especially as certain industries mature, the squeezed, we have a lot of people working on the cost side of the balance of the income statement. We also have a lot of people working around driving volume, price, and volume investments and thinking about Max, there’s usually not as many people or no people in a lot of instances thinking about that and how to do it in a disciplined way. And when you look at the leverage on the financial statement, it’s just too much of an opportunity not to, not to be looking at.

Will Bachman 41:55
Fantastic. Where can people who wanted to learn more about your firm? Where can they find more about you?

Avi Punwasee 42:02
Yep, so they can find us on the web at revenue ml.com or they can reach directly out, it’s myself, I’d be happy April wasI at revenue ml.com. We’ve got a lot of great materials on there from a revenue management perspective, and they can also find us on LinkedIn as well.

Will Bachman 42:21
Fantastic. Well, obviously, I loved the example that you walk me through, it really helped crystallize for me the kind of work you do and also the kind of breadth of thinking that’s required when you are trying to manage your revenue. I love the auto parts example that will stick with me. Thank you so much for being on the show today. I really enjoyed the discussion.

Avi Punwasee 42:43
Thank you. Appreciate it.

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