Lean Product Pricing
Product prices have traditionally been a function of product cost plus a margin, however, this doesn’t take into consideration the basic principle that the price a customer is willing to pay has nothing to do with your costs. The sole consideration a customer has is the value the product offers.
In addition, Toyota has long preached that this equation (Cost + Profit = Price) doesn’t work. Instead, the basic equation is Price – Profit = Cost. That is to say, if the customer determines the price and profit is mandatory, the only variable we control is the cost.
In this session I will demonstrate in practical terms how the leading lean companies set prices based on this Toyota formula, without the use of standard costs, allocations or concern for individual product margin. It combines Accounting, Product Management, Marketing and Sales input in a holistic, strategic approach that assures maximum customer value and optimum company profits.
In this session you will learn…
- How to set prices based on customer value without using product costs
- How to assure the optimum profit contributions from pricing
About the Facilitator:
Bill Waddell is a leading Lean consultant and teacher. He has worked with lean companies in 26 countries on five continents and is regarded as the leading expert in lean management. Bill has written a number of award winning books and is a prolific lean blogger, coach and lecturer.
In addition to being one of the original Lean Accounting thought leaders sho participated in the fist Lean Accounting Summit in 2005, Bill has served as the technical chair for the International Lean Six Sigma Quality Conference, has written a leading book on Lean Supply Chain Management, is defining the leading edge of Lean Sales and Marketing through forums such as Lean Frontiers Direct and is currently working on a groundbreaking book on Lean HR.
This is the twelfth year Bill has presented at the Lean Accounting Summit, and he has always been among the highest rated presenters. He is widely known for his engaging, practical and often entertaining style.