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Well, hello and thank you all 
again for tuning into another 

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episode of Professional Pricing 
Society Podcast. 

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My name is Terrence and before I
introduce our guest today, I 

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want to remind everyone that we 
have a conference coming up. 

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October 10th through the 13th 
will be holding our Fall Spring 

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Pricing and Workshop conference 
in Atlanta, GA And if you are 

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interested visit our website 
pricingsociety.com. 

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Now we have a new guest with us 
today by the name of Tim Geyer. 

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Tim is a North American leader 
of a software development 

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company called Market Pilot and 
he brings to the US market best 

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practices from over 100 
different European manufacturers

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to share with equipment 
manufacturers across the US and 

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Canada. 
Tim also is going to be speaking

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with us in Atlanta during our 
conference. 

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He has a speaking session called
Rethinking Cost plus the journey

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to market based pricing. 
Tim, how are you doing today? 

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Doing well. 
Thank you very much for having 

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me today. 
Thanks so much for being here. 

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I appreciate your presence. 
Let's go ahead and just jump 

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right into this conversation 
rethinking cost plus Now you are

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based in the industry of 
manufacturing. 

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How does market based pricing 
help machine manufacturers stay 

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competitive and maintain 
profitability? 

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Great question in a couple of 
ways, Terrence, so. 

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We really are advocates of 
market based pricing in today's 

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digital environment because we 
firmly believe that cost plus 

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pricing doesn't work anymore 
because there's so many 

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competitors out there, right. 
The competitive landscape is so 

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intense for most manufacturers. 
So market based pricing really 

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helps them stay competitive and 
also not only maintaining but 

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even increasing profitability in
four ways. 

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The first one really is that 
market based pricing reflects 

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real time value, right. 
So market based pricing make 

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make sure that pricing aligns. 
With what the market, what the 

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market and your customers are 
really willing to pay rather 

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than just looking at your costs,
what the most traditional and 

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most basic basic pricing 
strategy is? 

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The 2nd way is that it responds 
to competition of course, right.

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So you really have a good 
overview of what your 

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competitors in the market are 
doing, especially when you're 

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not offering a very 
differentiated product and 

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there's a lot of either 
knockoffs or will fit components

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or something like that. 
And then it's. 

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Very in a very important to get 
a handle on what your 

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competitors offering in terms of
pricing and of course the 3rd 

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and main, I think it's the most 
important reason for me 

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personally and for the companies
that I work with is that it 

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really drives profitability. 
So ensuring prices are or 

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ensuring the prices are set 
based on the market demand 

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really helps capturing the 
maximum value from each part or 

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from each component that you're 
selling versus just. 

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I know we're just applying a 
standard markup what most 

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companies are still doing 
nowadays, which is crazy. 

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And then the last point really 
is when you have a good handle 

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on what your competitors are 
doing in the market, it's really

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incentivizes innovation. 
Because seeing what your 

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competitors are doing and being 
very proactive and diligent 

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about it really helps you 
predict shifts in the market and

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in the market demand and in what
customers really want and need. 

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So it even helps in. 
In terms of product innovation, 

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which might sound a little odd 
at first, but it is a benefit 

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that is cool, very cool, Okay, 
four different components to 

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kind of help you all stay ahead 
of the game. 

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Now, how does a market based 
parts pricing strategy differ 

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from traditional cost plus 
pricing for machine 

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manufacturers in your eyes? 
Well, the most obvious one is 

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the foundation, right. 
So cost plus pricing, obviously 

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it's based on either production 
costs or purchasing costs with 

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some sort of markup depending on
for example, how critical or how

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complex a certain part or 
component is. 

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Market based pricing, you did 
you differently. 

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You set your pricing according 
to market demand and competitor 

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prices. 
And of course you still have to 

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make sure that you hit your 
margin goals, but there's in 

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many cases there's. 
Certain leeway or certain 

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opportunities to increase prices
further and for some parts you 

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might even have to cut your 
margins to stay competitive 

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within the market. 
So one stat here maybe that's 

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really interesting is I worked 
with about 150 Oem's now across 

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North America and Europe. 
And on average we see that only 

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about 4.1% of the parts in their
portfolio are priced at market, 

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which we define at deviating. 
My 5% either higher or lower 

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from the median market price and
all the other 96% of parts are 

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either underpriced or 
overpriced, which blew my mind 

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when I first saw it, but that's 
the reality out there. 

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Wow. 
Wow. 

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It's that steep. 
It really is. 

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And that's why, I mean, there's 
huge profit growth opportunities

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there, right, for the 
underpriced parts, specifically 

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when you're a trusted brand in 
the market, you're the OEM, you 

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invested a lot into your brand 
and into your end user customer 

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relationships and you should 
never be. 

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The, let's say the cheapest 
vendor in the market, that 

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should never ever happen. 
So there's crazy profit 

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opportunities in just increasing
your prices to the market level 

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and your customers, they won't 
be scared off because you're 

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still very much in line with the
market. 

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So that's really the beauty of 
market based pricing. 

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And the last factor here, how it
how it differs. 

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It just makes everything a 
little bit more flexible, right?

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Because you don't just 
reactively adjust your own 

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prices to how your costing 
increases when your suppliers. 

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Increase their prices because of
raw material shortages or 

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something. 
We've seen all kinds of supply 

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chain craziness over the last 
years, as you know. 

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But you can be more proactive 
about it and more deliberate 

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because you can see very early 
on how the market shifts and 

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then you can proactively adapt 
your pricing strategy according 

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to that. 
Good. 

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That's awesome. 
Well, yeah, market based pricing

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is one of those, one of those 
strategies and approaches to 

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pricing that in your opinion, I 
mean based on your history it 

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seems to I guess if you can plan
ahead, it works as best as it 

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can because everything is at 
market value. 

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So the 4% at market value when 
the rest is 9596% over above, 

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that's mind blowing to me. 
But hey, let me ask you this, 

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what are the benefits of using 
market based pricing in a 

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dynamic industry with a 
fluctuating supply and demand 

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for machines? 
Well. 

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The most obvious benefit is just
being more, more agile, right, 

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Not being as reactive as I 
mentioned before and allowing 

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manufacturers to quickly adjust 
their prices in response to 

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market shifts. 
So for example, we did an 

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analysis of Q1 in 2023 where we 
looked at all the all the Oem's 

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that we work with. 
We analyzed their parts 

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portfolios and how market prices
have changed and we found that 

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for 76% of parts. 
The market price has changed by 

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more than 10% within one 
quarter. 

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Wow. 
So the obviously the and not all

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of them increase, right. 
Many decrease, others increase. 

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There's really no rhyme or 
reason to it. 

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That's why we always tell our 
customers, hey, you really have 

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to look into pricing changes on 
a product level and not just do 

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an overall 2% markup. 
That's just not going to do the 

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trick in today's digital 
environment anymore. 

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So the main benefit is really to
just be more deliberate and make

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better decisions. 
With accurate market data as 

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kind of the baseline that you 
need to do that and what's 

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surprising or what was 
surprising to us as well. 

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We as a company, we helped 
through a few of the OEMs go 

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through prices where new 
equipment says we're way down. 

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But of course what was still up 
and running was service and 

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spare parts, because people are 
still operating their machines 

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and they have to repair them so.
Using market based pricing 

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especially in such a downturn 
period really helps with hedging

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against these downturns and 
minimizing risk because the 

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demand for parts compared to 
equipments will really increase 

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during these periods. 
So also pricing will increase 

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and as a manufacturer you adopt 
market based pricing and you 

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realize that you will really 
defend your profitability during

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times of economic downturn or 
recession. 

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So that's not a big benefit 
here, huge benefit. 

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That's a huge one. 
Yeah. 

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And now one last that I want to 
highlight actually that I just 

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forgot. 
It's not only about just 

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maximizing profitability, right.
That's one benefit of market 

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based pricing, yes. 
But the other one really also is

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to enhance customer satisfaction
and making sure that you as the 

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OEM can be the true one stop 
shop provider for all parts 

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needs from your customers. 
Because you can make sure Okay, 

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I've seen that on this part. 
I have a couple of dozen 

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competitors and they're actually
way cheaper than I am in the 

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market. 
So now I'm making a deliberate 

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decision to lower my price to be
competitive. 

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And then I will go to all my 
customers and tell them, hey, we

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invested into market data. 
We saw that we were too 

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expensive on some of the parts. 
So we reworked our cost 

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structure, whatever and now we 
can be much more competitive. 

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So why don't you just consider 
buying all your parts needs in 

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the future from us? 
Instead of shopping around and 

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going for different parts to 
different vendors and that's 

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really the blue Ocean strategy 
then sure, sure. 

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Yeah, I mean being the one stop 
shop so they don't have to go to

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other competitors and also 
having more of a market value on

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their pricing is that's a good, 
you know it's a good point. 

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It makes sense. 
When you say like that, you lay 

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it all out, it makes it all 
seems simple, but how can OEMs 

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implement market based pricing 
if they already haven't started 

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this process? 
Well, the most important thing 

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is to collect data at scale, 
right? 

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Usually any manufacturer has a 
couple of thousands or even 

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hundreds of thousands of part 
numbers or products in general 

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in their portfolios, and 
gathering accurate market data 

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for a complex portfolio is 
incredibly difficult so. 

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But most companies or those that
are already thinking about 

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market based pricing are doing 
is they do manual research where

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they just put in certain part 
numbers, for example into 

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Google. 
And pretty quickly they will see

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that there's so many vendors out
there and competitors using part

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numbers to sell the same parts 
that they get overwhelmed and 

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they only do it for, I don't 
know, their 20 or 50 most 

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important part numbers in their 
portfolio because otherwise they

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just can't handle it anymore. 
It's. 

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It's pretty funny because that's
actually how we started the 

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company. 
Our founder, he was a pricing 

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analyst for a big OEM in 
Germany, and he was tasked with 

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gathering market data for parts 
that they sold. 

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He did it for three months for I
think 300 parts that they sold 

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back then. 
He was burned out after the 

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three months, and he realized 
that after three months all the 

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market prices have already 
changed again. 

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Wow. 
And it was like okay, there must

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be a better solution to it. 
So that's why he came up with 

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that idea of let's just 
automated build a tool that 

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collects market data at scale, 
makes the whole process more 

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sustainable. 
So nowadays luckily OEMs, they 

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do have access to analytical 
tools that does all the heavy 

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lifting for them. 
And then the pricing experts 

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within these companies, all they
do is they use the data that's 

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been collected for them by some 
tool and. 

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Implemented into their broader 
either value based or cost plus 

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pricing strategy, whatever it 
is. 

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And the last step then really is
to once you make the changes, 

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you have to have a rock solid 
communication strategy in place 

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because otherwise you will scare
off your customers even if 

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you're still technically in line
with the market. 

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So I had this example. 
I was working with Noem in the 

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elevator industry a couple of 
months ago. 

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They were underpriced for a 
significant portion of their 

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business and what they did is 
raised the prices quite 

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significantly, so by more than 
30% in some instances just in 

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one jump. 
But they had a very, very good 

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communication strategy in place 
where they explained their 

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customers why they did that. 
And they also highlighted a few 

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key parts where they dropped the
price to be more competitive and

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they almost had no negative 
impact on their sales 

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quantities. 
Despite these heavy price jumps.

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So it's all about how you 
communicate it with your team 

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and with your customers as well.
Yeah, that customer satisfaction

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piece is huge and it goes a long
way. 

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Even if you don't have that, if 
you're missing that but you do 

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have all the right data, that's 
a huge component you don't wanna

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forget about cuz that can make 
or break obviously your sales. 

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And it's and it's really depends
also on what your distribution 

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strategy for parts is. 
Because when you sell directly 

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to end users, then of course you
have that direct relationship, 

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right? 
And it's easy to push out 

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communication to them. 
It gets a little bit more tricky

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when you sell through dealers, 
right? 

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So various industries like in 
agriculture, construction, I 

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know HVAC, there's all these 
industries out there where 

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pricing teams are very 
sophisticated, but they don't 

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have a way to communicate with 
the end users who are actually 

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buying the parts directly. 
So you also have to involve in 

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this whole market based pricing 
thing, you also have to include 

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your channel partners and make 
sure that you are providing them

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with the correct list prices. 
And you also provide your 

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channel partners with the market
data so that they precision 

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themselves correctly in the 
market so that you're not losing

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market share to all these other 
OEMs or third party vendors out 

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there, gets a little bit more 
tricky there. 

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But the more data you have, the 
better you're prepared for these

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discussions. 
Yeah, exactly, exactly. 

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Now this next question I want to
ask, you can apply to either the

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OEM and manufacturing industry 
or others. 

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But from a long term 
perspective, how has market 

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based parts pricing shown its 
resilience in various economic 

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conditions, essentially 
contributing to the overall 

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stability of the industry I? 
Think the main point really is 

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just the resilience when it 
comes to recession, right. 

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Because in. 
In economic downturns, market 

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based pricing can adjust either 
downward to maintain the sales 

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quantities that you need, for 
example to not have too much 

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stuff in your inventory and to 
just get your inventory cleared 

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out. 
Or at the same time, as I was 

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saying earlier, sometimes the 
prices for parts in a recession 

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even get higher, so you might 
keep your profitability high 

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despite being under pressure on 
the new equipment side and the. 

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The other really I guess the 
biggest piece here is, 

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especially when it comes to 
overall stability of the 

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industry, is the whole reshoring
trend that we see that a lot of 

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manufacturing is coming back to 
the US specifically and we're 

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relying less on on global supply
chains nowadays. 

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It actually helps the industry 
stabilize because all of the 

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sudden you don't have all these 
offshore competitors anymore for

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huge chunks of your supply 
chain. 

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But then it's more important to 
keep track of your local 

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competitors because your local 
competitive landscape and the 

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ecosystem here will thrive and 
develop. 

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And it's much more important to 
keep an eye on what the local 

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American market is offering in 
terms of prices and lead times 

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compared to, yeah, they will 
just buy it in China because 

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it's cheaper over there. 
So that's having that access to 

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market data will make our local 
players here in the US more 

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competitive. 
And it's a beautiful coincidence

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almost that it's it coincides 
with the with the whole 

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reshoring trend nowadays. 
The the last thing I want to 

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highlight sorry I keep rambling 
here a little bit but I get 

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excited that's great. 
The last thing is really that or

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any everyone in the industry 
wants recurring revenues, right 

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and or anyone parts when you 
sell a piece of equipment 

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whatever it is. 
Arts and services, that's your 

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steady stream of income. 
You know that it's going to be 

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pretty predictable. 
It's recurring revenue. 

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You don't have to do too much 
about it to get that sales and 

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that profit in. 
And however you are, you're 

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00:16:20,100 --> 00:16:22,980
risking to lose that market 
share or that predictable 

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00:16:22,980 --> 00:16:26,340
revenue if you're not adjusting 
adjusted to a more intense 

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competitive environment. 
So having access to market data 

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will make you more resilient in 
the long term because you 

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understand how the market is 
shifting. 

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And you can defend your position
as the OEM in the market, sure. 

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Yeah, that's good. 
Yeah, the access is a huge deal.

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I mean if you don't have access 
to the information you need to 

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00:16:45,850 --> 00:16:49,850
be considered a legitimate 
competitor, you're probably not 

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00:16:49,850 --> 00:16:54,530
going to thrive as successfully 
as you think you might would, as

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you think you would. 
One last question for you, Tim, 

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00:16:57,890 --> 00:17:00,090
Can you discuss instances and 
you may have already alluded to 

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00:17:00,090 --> 00:17:02,330
this, but can you discuss 
instances where market based 

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00:17:02,330 --> 00:17:05,400
pricing in the machine 
manufacturing industry has 

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00:17:05,400 --> 00:17:07,640
resulted in better alignment 
with customer needs? 

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00:17:08,440 --> 00:17:10,560
Absolutely. 
We already talked about 

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resoring, right. 
So one side effect of it is 

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actually especially in the last 
two or three years with all the 

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00:17:17,640 --> 00:17:21,560
supply chain crisis things that 
we had going on suddenly lead 

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00:17:21,560 --> 00:17:25,520
times for parts and critical 
electric components for example,

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00:17:25,520 --> 00:17:29,720
they exploded. 
So a lot of manufacturers that 

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already invested in market data 
prior to the crisis. 

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They benefited significantly 
because they, yes, on the one 

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00:17:37,660 --> 00:17:40,300
hand, they had pricing 
intelligence for the North 

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00:17:40,300 --> 00:17:42,860
American market. 
But in order to do that, they 

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00:17:42,860 --> 00:17:47,020
also had to know who is 
supplying certain parts, at what

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00:17:47,020 --> 00:17:48,580
price and what are their lead 
times. 

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So all of the sudden they were 
much more flexible. 

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00:17:51,220 --> 00:17:55,100
They could shift their global 
supply chains more quickly to a 

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00:17:55,180 --> 00:17:58,380
North American supply chain. 
And source critical components 

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quickly before all their 
competitors in the market tried 

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00:18:01,060 --> 00:18:03,900
to do the same thing, just 
because they had a broader 

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00:18:03,900 --> 00:18:07,100
transparency of the market. 
So that really aligned well with

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customer needs because they 
desperately needed parts back 

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then. 
They didn't care about the price

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00:18:10,820 --> 00:18:12,380
to be honest. 
They just needed it quickly. 

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00:18:12,820 --> 00:18:15,100
So those companies that had a 
good understanding of the 

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00:18:15,100 --> 00:18:18,420
competitive landscape, they've 
sourced it locally and they they

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00:18:18,420 --> 00:18:19,820
weren't big, let's put it that 
way. 

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00:18:19,820 --> 00:18:21,220
Wow. 
Awesome. 

337
00:18:22,020 --> 00:18:23,860
Cool. 
And the one other example is 

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00:18:23,860 --> 00:18:28,730
really when you. 
When you first launch some new 

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00:18:28,730 --> 00:18:32,690
product or component or whatever
in a market where you don't know

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00:18:32,690 --> 00:18:35,530
the market price, it's 
incredibly important to do that 

341
00:18:35,530 --> 00:18:39,010
analysis before you launch it, 
as you know, because the best 

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00:18:39,290 --> 00:18:42,250
point or the best point in time 
to introduce a new price is when

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00:18:42,250 --> 00:18:45,010
you launch the product. 
If you want to increase the 

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00:18:45,010 --> 00:18:48,410
price at a later stage, it's 
always, yeah, so it's a huge 

345
00:18:48,410 --> 00:18:50,770
discussion with your customers. 
So you want to avoid that? 

346
00:18:51,450 --> 00:18:52,010
Sure, yeah. 
Yeah. 

347
00:18:52,170 --> 00:18:54,780
But there has been success in 
doing that, but there's also 

348
00:18:54,780 --> 00:18:58,060
been obviously some failures as 
well as far as dropped 

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00:18:58,060 --> 00:19:01,220
profitability and decreased 
revenue. 

350
00:19:01,220 --> 00:19:04,140
So it just depends on how you 
communicate and depends on, in 

351
00:19:04,180 --> 00:19:07,140
this case, the data you have and
the type of market data you 

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00:19:07,140 --> 00:19:08,500
have. 
So Tim, I really appreciate your

353
00:19:08,500 --> 00:19:11,170
time speaking with me today. 
It's been a pleasure. 

354
00:19:11,330 --> 00:19:14,250
You were able to give us a lot 
of insight, a lot of gyms 

355
00:19:15,170 --> 00:19:18,530
regarding this topic and you are
going to be with us in Atlanta 

356
00:19:18,610 --> 00:19:20,570
in October. 
He's going to be leading a 

357
00:19:21,050 --> 00:19:24,810
speaking session called 
rethinking cost plus the journey

358
00:19:24,810 --> 00:19:27,770
to market based pricing. 
Now before I let you go, Tim, 

359
00:19:28,050 --> 00:19:30,930
would you mind sharing with the 
listeners any way that they can 

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00:19:30,930 --> 00:19:33,650
learn more about you or market 
pilot or how they can get in 

361
00:19:33,650 --> 00:19:36,450
contact with you? 
Absolutely best way to get in 

362
00:19:36,450 --> 00:19:39,010
touch with me is on LinkedIn. 
I'm very active there. 

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00:19:39,010 --> 00:19:43,250
So happy to connect with any 
pricing experts or soon to be 

364
00:19:43,250 --> 00:19:46,570
pricing experts out there. 
Just look up Tim Geyer that's 

365
00:19:46,650 --> 00:19:49,570
you probably saw the name in 
your podcast Catcher looking 

366
00:19:49,570 --> 00:19:52,570
forward to connect and would be 
happy to chat more over a beer 

367
00:19:52,570 --> 00:19:54,250
in Atlanta. 
All right. 

368
00:19:54,530 --> 00:19:56,650
Thank you so much for your time.
So you have a very safe day 

369
00:19:56,650 --> 00:19:58,370
today. 
Thank you for having me. 

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Take care.