Price rise and revenue
- Rise 8% · Customers 3,965 · Revenue GBP 5,138,381 · Change GBP 98,381.
Executive Intelligence · Customers and Commercial Strategy
Pricing and Commercial Strategy
Price and margin analysis and scenarios from verified cost and sales data with documented formulas.
Demonstration: Brightwater Software (fictional) · Software. Fictional data and a scripted answer.
The situation
- Organisation
- Brightwater Software (fictional)
- Who is asking
- Chief commercial officer
- Industry
- Software
- What happened
- The company is considering a price rise on its mid-tier plan and wants to know whether the extra income outweighs the customers it may lose.
The question asked
What price change on the mid-tier plan maximises revenue, given plausible customer reaction?
What it reads, and who can see the result
- Plan revenue and customer counts exportMid-tier customers and price.
- Past price-change reactions documentWhat happened last time.
- Reads
- Counts of customers and past reaction summaries.
- Does not read
- Individual customers' accounts.
- Permission
- Commercial analytics access.
- Who sees it
- The CCO and the pricing council.
Try it
Change the assumptions. Every result and the answer below are recomputed from them, and a warning appears when a result crosses a stated limit.
- Customers remaining
- 3,965Today 4,200 customers at 1,200 a year.
- New annual price
- GBP 1,296
- Annual revenue after the change
- GBP 5,138,381
- Change from today's 5,040,000
- GBP 98,381
The answer
Simulated answer. Written for this fictional case, not produced by a live model. Only the figures in it are computed, from what you decided above.
A 8% price rise changes revenue by GBP 98,381, to GBP 5,138,381.
At GBP 1,296 a year with 3,965 customers remaining, revenue is GBP 5,138,381 [S1]. The reaction rate decides everything: at 0.7% of customers lost per point of price, the result is as shown [S2].
Revenue is not the only goal: a customer lost may also be a reference and a source of expansion. The pricing council should look at the reaction rate it is relying on, not only at the output.
Relies on: S1 · Mid-tier plan revenue and customersS2 · Reaction to the last price change
No approval is needed for this result: it is read-only insight, and nothing consequential happens because of it.
What it produces
Limits of this example
- A straight-line reaction; real reaction is not linear and differs by segment.
- Ignores competitors' responses.
- This is a scripted demonstration on fictional data. No model was called and no real organisation, person or result is shown.
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