Theory of Constraints (TOC) Pricing Quoting Estimating
Theory of Constraints (TOC) Pricing Quoting Estimating Project
We usually do pricing projects as part of larger results based consulting engagements, but because they have been so successful (typically 10 to 20+% return on Throughput), we have decided to offer stand alone pricing projects.
This program is targeted at custom manufacturers, job shops and machine shops who wish to improve their pricing, quoting and estimating process to enhance profits.
Here is what a pricing project entails:
- A global pricing analysis based on Goldratt’s Theory of Constraints. This includes current pricing, and an overall determination of what pricing is necessary to achieve the overall profit objectives of the company with both existing capacity and the capacity expected after a Theory of Constraints (TOC) Drum-Buffer-Rope implementation. We evaluate your current quoting software or estimating software, costing, and shops rates.
- A detailed pricing analysis. This requires reviewing historical information in detail by customer, customer ship-to location, sales representative, constraint, product and/or service, product and/or service category, and market segment. From this analysis we will gain insight regarding good and bad current practices, and regarding opportunities.
- A competitive and cost accounting pricing analysis. There are prevailing pricing practices that will give us information about and insight regarding erroneous assumptions that competitors are making about costs, margins, and preferred products, services, and markets.
- Sales compensation. We want to understand the cause and effect of current company and competitor sales compensation, incentives, and commission practices.
- Recommended pricing, pricing strategy and sales compensation. Steps one through four will give us the information required to make specific recommendations regarding pricing (and sales compensation) by customer, customer location, sales representative, product, service, market segment and constraint. This includes the recommended lower limit of pricing, the average that must be maintained to meet company objectives, and the “sweet spots” that can be exploited competitively.
If you are ready to start a pricing project or would like to discuss your situation, please call or email Dr Lisa at 303-909-3343. We will provide you a custom proposal and pricing.
If you have not yet gone through “Pricing using Theory of Constraints”, please see: Pricing using Theory of Constraints You can also seach my blog for “pricing” to get some background information.
Pricing projects can be done before or after a Mafia Offer Boot Camp. They are so closely related, it does not matter which order they are done in, but both should be done at the start of ANY project.