A global provider of reservation software, marketing solutions, and business intelligence data to the hospitality industry was looking to drive revenue growth in the midst of shifting market dynamics and significant competitive pricing pressure. Partnering with Waterstone, the client launched a new pricing approach that will allow the company to compete more effectively in the marketplace.

The Issue

A leading provider of reservation software, marketing solutions, and BI data to the hospitality industry was looking to drive 20% revenue growth through new offering and pricing models, amid shifting market dynamics and significant competitive pricing pressure.  The company was looking to bundle its offerings to drive new customer acquisition, increased share of wallet for existing customers, and to grow its recurring revenue base while minimizing margin impact.  However, the company’s existing offering and pricing models were not optimized across the four main product families to fit together cohesively.  Additionally, significant price variability for customers of the core product had put many at risk to switching to low-priced competitors.

The Approach

Waterstone worked closely with the product, sales, and internal pricing teams to understand existing customer pricing dynamics, identify key competitive threats, and develop several offering and pricing strategies to be tested.

The Waterstone team performed deep analysis of several years of customer spend and transaction data to identify pricing trends and correlations across geographies and various customer segments.  The team developed several detailed pricing and financial models of existing and future/proposed pricing dynamics to measure revenue and margin impact at the individual deal, customer segment, and company levels.  The team ran detailed sensitivity analysis for the proposed price points to minimize margin and cannibalization impact from the new pricing strategies.  In addition, the team tested the proposed offering and pricing revisions with several at-risk and opportunity customers across regions, as well as with internal product and sales teams.

The Waterstone team developed and documented a consistent product bundling and pricing methodology, as well as pricing rules with specific migration approaches
for existing and new customers to move to new pricing - balancing risks and opportunities in order to extract greater value. The team supported internal
communication to the sales team, and developed job aids, deal pricing calculators, and collateral pieces to help enable new pricing launch.

The Results

The bundle pricing strategy, tied to per-room per month pricing tiers, allows the company to compete more effectively with competitive point products and newer low-cost challengers. The client has realized $3M in new revenue via the new pricing strategy, and has identified an additional $7M in near-term sales opportunities. Given this positive momentum, the CEO is considering expanding the bundling strategy to drive up to 50% of new revenue.