Pricing Review – SPR
April 2012
Channel SPR Request Performance
YTD Requests Line Items: Price Approved as Requested (October -December 2011)
Request Type
CCR
MCP
NDR
DVP
OSP
Total
# of Line Items:
Price Approved
as Requested
41
1055
858
719
9
2682
# of Line Items:
Price Approved as
Requested with $1
of Bookings
5
179
86
67
337
Hit Rate %
12.2%
17.0%
10.0%
9.3%
0.0%
12.6%
Price Approved as
Requested Expected
Bookings
$
2,529,945
$
164,653,352
$
1,337,290,509
$
77,598,707
$
418,934
$
1,582,491,447
$
$
$
$
Price Approved as
Requested Actual
Bookings
62,068
7,997,251
2,359,352
239,330
$
10,658,001
$
$
$
$
Countered Requests
Expected Actual
Bookings
212,601
446,277
351,129
358,658
$
1,368,665
$
$
$
$
Countered Requests
Expected Actual
Bookings
298,147
8,451,701
2,724,587
617,796
$
12,092,232
Performance %
2.5%
4.9%
0.2%
0.3%
0.0%
0.7%
YTD Requests Line Items: Requested Price Countered (October -December 2011)
Request Type
CCR
MCP
NDR
DVP
OSP
Total
# of Line Items:
Countered
121
1556
621
1150
22
3470
# of Line Items:
Countered with $1
of Bookings
15
111
40
96
262
Hit Rate %
12.4%
7.1%
6.4%
8.3%
0.0%
7.6%
Countered Requests
Expected Bookings
$
6,829,088
$
246,980,000
$
413,630,046
$
261,047,877
$
95,132
$
928,582,144
Hit Rate %
7.5%
6.4%
5.7%
6.7%
0.0%
6.3%
Countered Requests
Expected Bookings
$
17,332,139
$
652,678,131
$
1,854,392,076
$
371,755,710
$
514,066
$
2,896,672,123
Performance %
3.1%
0.2%
0.1%
0.1%
0.0%
0.1%
YTD Requests Line Items: Total (October - December 2011)
Request Type
CCR
MCP
NDR
DVP
OSP
Total
# of Line Items:
Countered
293
4564
2247
2481
31
9616
# of Line Items:
Countered with $1
of Bookings
22
291
127
167
607
Performance %
1.7%
1.3%
0.1%
0.2%
0.0%
0.4%
BOOK PRICE? COMPETITIVE?
• Many of the sales today are not willing to try the book price because
they lack faith in the pricing. We also tend to feed this view by;
– Giving special pricing on requests with small qty or where no
competitive information was provided.
– When sales ask what price is reasonable with no information from
the customer on competitor etc and we don’t refer them to the book
price.
– When we allow for discounting on our existing price structure
without proper market/profit analysis.
• The quickest way to get them to change the perception is for YOU to
believe in your pricing and for them to have some wins with the
current book price level.
BOOK PRICE? COMPETITIVE?
• GPL 236 – ASIA POS STUDY vs OEM BOOK PRICE LEVEL
– Last 12 months data.
• 10575 line items with avg price falling in the BOOK PRICE RANGE.
• 3906 line items with avg price falling outside of book range.
GPL 236 POS AVG PRICE
OUTSIDE BP
RANGE
27%
INSIDE BP RANGE
73%
INSIDE BP RANGE
OUTSIDE BP RANGE
Why “Special Price Request” ?
 when there is no book price published in the region,
 QTE (SAP Quote).
 when they need to follow OEM contract price,
 FAP (Follow Agreement Price).
 when there are solid reasons/justifications,
 MCP (Meet Competitive Pricing);
 NDR (New Design Registration) – Only for Distribution;
 CCR (Competitive Conversion Request) – Only for Distribution;
 CSS (Clear Stock Selling) – One Time Deal  Coming Soon !
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Types of Pricing Request and Application Requirements
1) Meet Competitive Pricing (MCP)
 Mandatory information to put in the request:
Target price
Competitive price
Competitor name
Competitor product name/description
 If the mandatory information is not provided, the request will be rejected !
2) QTE (SAP Quote)
No Standard Price is available in E-Commerce
Need background information on why this PN is needed
Request shall be rejected if business information is inadequate
Types of Pricing Request and Application Requirements
3) New Design Registration (NDR)
 Applies to situations where a distributor has a direct and substantial role in
identifying or creating demand for eligible TE Products
 The minimum value per line item is 5,000 USD
 The validity of a NDR is 2 years. During this period TE has the right to revoke the
registration without liability to the distributor if customer could not fulfill the
committed order qty.
 The ID number provided along with the approval of the NDR has to be inserted in
the Pricing Request. If not provided, the pricing request will be rejected.
4)



Competitive Conversion Request (CCR)
Brand new business / Project
The minimum value per line item in a CCR request is 5,000 USD
The validity of a CCR is 1 year. During this period TE has the right to revoke the
registration without liability to the distributor if customer could not fulfill the
committed order qty.
Types of Pricing Request and Application Requirements
5) FAP (Follow Agreement Price/contract price)
 End customer/ultimate end customer must be with TE
 Letter of Authorization (LOA) or approval document from the Agreement owner
must present
 Valid only when end customer/ultimate end customer has an effective
agreement price fixed with TE & meet/above the MOQ
6) CSS (Clear Stock Selling)  Coming Soon !?
 A special price to clear stock that may become dead stock if not sold for
any dollar value
 Normally it is at “One Time Deal” or within a very short offer period.
Customer may place one single order for the whole lot stock.
Matrix of Request Types and Requirements – AP
Type of
Request
Products
Meet
Competitive
Pricing
(MCP) All Products
When to Use
A price is offered to
compete with a
defined competitor to
win TE business
A special price may
be offered only to the
distributor who
New Design
caused TE product to
Registration
be designed into a
(NDR) All Products new application
Competitive
Conversion
Request
(CCR) All Products
A special price may
be offered when
converting existing
business to TE
Used when a
Customers'
Follow
agreement price is
Agreement
required for
Pricing
purchasing TE
(FAP)
All Products product
POS
Informatio End
n
Customer
Y
Y
Y
Y
SAP Quote
When no Valid Price
(QTE) All Products in SAP
* NDR & CCR
– for Distributor use Only
Y
Target
Price
Y
Competit
or Name
and
Competiti
Product on Price
Y
LOA
Y
Y
defaul
Pricing
Validity
Price
Validity
Must be MOQ
or multiple of
MOQ/ Min
Order Values next year
for GPLs
end
12 Months
Y
Y
Y
PreMin
Approval Requested
Required Qty or Value
Y
Y
Y
USD $5,000
per line item
minimum
730 days
Y
USD $5,000
per line item
minimum
365 days
Comments
Notification should be
provided to TE if business
was won. Competitive
Situations will be tracked for
performance and may be
subject to price changes
Requires pre-approval with
Sales. New designs only.
Term 24 months with 12
month review of performance.
Discounts only provided to
distributor who designed in
12 months product.
Replacement or conversion to
a TE product at an account
that shows no sales or POS
history for 12 months prior to
12 months conversion.
Based on
Customer
Agreement
Must be MOQ
term or
or multiple of next year LOA time
MOQ
end
frame
Must be MOQ
or multiple of
MOQ
30 days 30 days
Letter of Authorization is
required from Customer prior
to use of a agreement price.
No added discount provided.
follow up book price set up (if
needed)
Important Notes
All the above mentioned are required to comply with the followings:
 Valid for active TE part; correct SPR type is chosen
 Information put in SPR should be true and correct to the best knowledge
 End customer information is required on Header page in GPMS and
ultimate end customer must be identified if it is a subcontractor
 Require accurate order qty in Annual or Project base. TE might revoke
the price if customer fails to fulfill the application requirements, e.g. the
committed order qty.
 The official valid period for a special price is 30 days in general although it
might be valid with a longer period in our internal record.
 Special Price upon expiry will NOT be renewed automatically. Request
shall be submitted again together with all updated justifications for Pricing
approval.
 Book price will be offered if concrete reasons/justification is insufficient.
 No special price quotation is legitimate ONLY IF it is reviewed and
approved by Pricing Team – Don’t pre-commit special price to customers !
Inaccurate information: Req#:001269805
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六
Why PMS and DVP shall be removed?
Original
Intention/Initiator
To support PM's major
product strategy
PMS (Product Manager Strategic
Pricing)
Initiated by PM
Actual Use/Effect Today
Reasonale to Remove them
Sales to seek busy PM ok to avoid
pricing question on justification
Book price basically reflects the product
strategies or book price shall be revised
Initiated by sales/distributors
Price further lower than book price shall
major due to competition hence MCP be
more appropriate
Mainly trivial individual request than
major product strategy
PM can lay down policy for specific product
strategy
An option to avoid getting and giving
competition information
Loss of chance to gather competition
information
Major price erosion drivers
Support PM's skimming
strategy
DVP (Distribution Volume Discount)
Initiated and supported by
PM for specific distributor
partners with good plan
Use by distributor to make pricing as
volume drivers
Volume discount is already facilitated by
column book price
Always trivial individual requests
instead of major product pricing
penetration strategy
Price lower than book price range shall
mainly due to competition hence MCP
more appropriate
An option to avoid getting and giving
competition information
PM can have the policy set up with PA
Major price erosion drivers
Loss of chance to gather competition
information