Telecoms

Pricing Challenges and Opportunities

The deregulation of the telecommunications industry since the 80s in the US and the late 90s in Europe has had various consequences for the operators: prices have dropped, especially for long range communications, churn has strongly increased due to the high number of attractive offers. At the same time, telecom providers have made huge investments for third generation licenses and networks.

These factors explain why leading telecommunications providers are adopting differential pricing as a competitive weapon to protect their own markets and penetrate new ones. This revolutionary pricing technique has been used successfully since 1985 by the airline industry in a similar competitive environment. Like the airlines, telecom operators can segment clients according to their price sensitivity. They have fixed costs and capacity constraints, especially due to inter-connection agreements, that create opportunity costs at certain times of the year.

In this context, Intelligent Pricing enables them to:

• In B2C, gain new customers with pricing incentive and develop customer loyalty with personalized/targeted contracts  
• In B2B,optimize the negotiation and profitability of global contracts with other businesses

Benefits of Open Pricer technology

Open Pricer provides solutions to assist Telecom providers in optimizing their sales margins through applying effective differential pricing in the B2C and in the B2B sectors of their business. The following are some of the advantages provided by our intelligent pricing technology :

• gain new customers, minimize churn and optimize profitability using differential pricing as a negotiation lever
• segment the customers depending on their price sensitivity
• estimate the perceived value of different product attributes and options (quality level, added-value services, support …)
• adjust prices dynamically depending on win/lose ratio
• evaluate the price that optimizes (depending on the strategy) the expected activity, the expected revenue and the expected contribution margin of each contract
• calculate precise incremental and opportunity costs generated by each contract according to the cost & drain structure, the number of calls vs. talk time
• optimally allocate limited resources to those contracts which have the highest expected profitability
• evaluate the actual return of a promotional incentives or an advertising campaign