Implementing intelligent pricing at JKF

Holger Jensen

Product customization required further attention


Around 20% of JKF’s annual turnover involves customized products. The offer constitutes one of the company’s main value propositions and is considered essential to the business. It can entail minor adjustments to standard settings as well as more radical changes. Customized products will always require extra hours of work from the Production Techniques department.

To update its cost structure, JKF began reviewing sales reporting on its customized products. These showed some contribution from the range - but also room for improvement, since margins were no better than on standard products. The thinking was that because customization creates value for customers, it should be possible to charge higher prices for the service.
Based on these reflections, the company formulated a strategic decision that it then included in the following year’s business plan.

The move towards intelligent pricing


JKF is attached to excellence in both service and customer satisfaction. Pricing its product ranges “intelligently” is entirely coherent with this approach. Prices had previously been set by the Customer Center, which would estimate how much of a surcharge should be added to a standard component price. There was a tendency to under-estimate the extra cost of customization, as well as the time this took. Higher factors should have been used when calculating the new sales prices.

Hence the introduction of new guidelines. The end result is that prices are now a more accurate reflection of JKF’s real costs.

Increased margins on customized products


Margins have risen – but there is much more to do.
The opportunities awaiting JKF in this area will encourage long-term industrial investment and create lasting value. Financial performance will finally realise its full potential!