Pricing Misalignment Diagnostic May Start with Benchmarking but Must Go Beyond to Find the Root Cause

Introduction

In the current recessionary environment, the buyer community is bracing for slow growth. It has become increasingly important to focus on spend management and, consequently, review supplier pricing in order to maximize outsourcing returns.

Over the past two quarters, Everest has witnessed an increase in demand by buyers for price benchmarking on current and future outsourcing deals. These requirements come for both input-based and output-based price benchmarking.

While benchmarking is good for diagnosing the pricing problems, it does have limitation. For example, it does not attempt to address the underlying reasons behind the problem and therefore may fail to provide a comprehensive solution. This white paper looks at a hypothetical client situation modeled after multiple real-life client requests. This situation is designed in such way as to represent most buyers’ concerns around supplier pricing in the context of the current economic environment.