Customer Centric Pricing

Margins under pressure

In most telecom markets average revenue per user (ARPU) is declining due to:

• New operators entering mature markets,
• Easier switch due to portable phone numbers,
• Shorter contracting cycles,
• Flat prices for voice, data and TV services
• Regulation limiting interconnection prices

Price is now the key buying factor for telecom services.

On the other hand, costs must now be taken into consideration when calculating customer life time value and profit contribution:

• Direct costs: acquisition, interconnection, roaming
• Peak-load usage impacting service quality and driving need for extra capacity investments due to crowded radio access in many areas

Lifetime value optimization becomes a critical business challenge

Optimizing every customer lifetime value thanks to accurate pricing is now a critical challenge for telecom operators in both consumers and business segments .The Open Pricer Suite™ permits to analyze, simulate and optimize lifetime value, micro-segment by micro-segment and deal by deal

Maximizing contribution, not only ARPU

The following figure presents the analysis of the monthly contribution for a given customer. As shown the challenge is to maximize contribution (i.e. total charges minus incremental costs over the time of the contract), not average revenue per user.