Turning challenges into profit opportunities
As globalization and digitalization reshape the industrial goods and machinery market, companies are facing a broad set of challenges. New growth markets, sustainability and decarbonization, Industry 4.0, the Internet of Things (IoT), the rise of B2B e-commerce, and many other developments are making new business and pricing models essential.
Innovation is driven by new growth markets and sustainability
The United States and Asia, in particular China, continue to be key geographic growth markets for the industry. They are complemented by Europe, where technological transformation is creating rising demand, for example in robotics, which is particularly strong in the DACH region. In addition, there are industry-specific growth markets, such as the United Arab Emirates and Morocco for 3D printing. Beyond these geographic opportunities, technological innovation is creating new sub-segments with significant potential. Automation, IT, and connected devices form the basis of Industry 4.0 and are opening up new fields of business. In particular, the combination of traditional mechanical engineering expertise with IT capabilities and AI is blurring established boundaries between disciplines and raising the bar for workforce planning.
Rising investment in innovation
The pace of technological change is being further accelerated by the shift toward decarbonization, making increased investment in innovation unavoidable. Beyond machine efficiency and emissions, areas such as packaging and logistics are gaining importance. This not only raises innovation pressure but also significantly increases the complexity of sustainability management. Customers are placing greater emphasis on environmental impact and increasingly factoring it into their purchasing decisions.
At the same time, regulatory developments are forcing companies to reassess their environmental footprint from both a compliance and economic perspective. However, the transition toward sustainable technologies also offers substantial growth opportunities. Demand for environmentally friendly solutions is rising, and companies with strong innovation capabilities are well positioned to benefit. This shift is accompanied by high investment volumes, further intensified by developments in Asia, where markets are becoming more mature and capital investment in innovation is accelerating.
“As part of the joint project, the consultants from Prof. Roll & Pastuch analyzed and conceptually developed our entire price management in the spare parts sector. The project involved a comprehensive optimization and implementation of measures ranging from list price formation to the handling of conditions in international pricing. We were particularly impressed by the consultants’ methodological competence, especially in providing tools that we need for the continuous management of our prices. The collaboration with our team was intensive, always productive, and very pleasant. Due to the successful cooperation, we have decided to address further topics in pricing and sales with Prof. Roll & Pastuch this year.”
“With the help of Prof. Roll & Pastuch, we have made tremendous progress in strategic sales topics, especially in pricing. The outstanding expertise, professional collaboration, and a great team spirit have helped us tackle even the most challenging questions at any time. We look forward to the next joint projects.”
“We engaged Prof. Roll & Pastuch on a successful pricing project aimed at strengthening the foundations and consistency of our product and service pricing, improving the steering of our discounting, and sharpening our overall pricing management. Our collaboration has had a lasting impact and continues to deliver benefits today, thanks to Prof. Roll & Pastuch’s pragmatic approach, strong partnership with our business, and clear drive to implement. For future support, they would be our first choice.”
New opportunities through Industry 4.0
Service and software are becoming increasingly important components of the product portfolios of machinery and industrial goods companies. Like the wider economy, mechanical engineering is being transformed by the megatrend of digitalization. However, as one of the most innovation- and research-intensive industries, it is affected to an even greater extent. Core requirements include connected production, machine sensor systems, and remote maintenance. Within the context of Industry 4.0, digital twins are also playing an increasingly important role.
Internet of Things
The Internet of Things (IoT) is becoming increasingly important, as it enables the connectivity of physical and virtual objects. This is blurring the boundaries of traditional communication infrastructure and allowing information from the environment to be captured, processed, and transmitted automatically. In this way, objects can communicate and collaborate without human intervention, creating significantly smoother and more efficient processes. Smart devices form the foundation of this hardware infrastructure through intelligent, connected equipment, systems, and machines. For companies in the industry, this means adapting their infrastructure in order to unlock the synergies of IoT. In particular, the ability to control devices and machines remotely can provide a clear competitive advantage.
E-commerce as an opportunity and risk for industrial goods and mechanical engineering
E-commerce is no longer an exclusive route for B2C sales; it is also spreading rapidly across B2B. The focus is less on building a rigid digital sales channel and more on creating integrated platforms that connect procurement and sales directly with production. Using digital twins and IoT data, companies can, for example, calculate prices for products that do not yet physically exist. Connected production systems feed simulations and models with data to determine whether a specific product can be manufactured and what level of effort this would require. For pricing, this creates a major advantage: production costs can be estimated before a physical product has even entered the production process. Quotes can thus be generated quickly and efficiently. In addition, the offering can be expanded flexibly within the technical capabilities of the installed machinery. Procurement of standard parts can also be automated, helping to reduce idle times even furthe
New equipment
New equipment often enters the market as a technical innovation. R&D may have delivered an excellent product, but sales frequently lacks a clear value proposition and a value-based competitive positioning. The result is a familiar question: what should the launch price of the machine be? Too often, the answer is simply the price of the predecessor model. This is one of the reasons why margins in the new equipment business often remain unsatisfactory. Negotiations with customers focus primarily on price and additional discounts, while sales teams often lack the sales tools and negotiation training needed to counter procurement pressure and realize attractive market prices.
Pricing solutions for new equipment
For innovative new equipment, companies should implement a systematic pricing approach that captures willingness to pay as effectively as possible. A strong modular structure is particularly well suited to this, with features or performance packages bundled around clearly defined customer value. The value of each module is assessed in detail based on customer benefit and then translated into package pricing. This makes it possible to monetize advantages such as higher output or reduced downtime, which often create value far beyond the underlying cost increase. This value pricing should be supported by compelling sales materials and a well-trained sales organization so that customers clearly understand the value the solution delivers to their own business.
Aftersales / spare parts
The new machine business is typically accompanied by the sale of spare parts. In many industrial goods and mechanical engineering companies, the spare parts portfolio comprises tens of thousands of items. This creates major complexity, particularly given strong competition in bought-in parts and rising price pressure from third-party suppliers. At the same time, many companies remain uncertain about which pricing methods are actually appropriate: in which categories should pricing be benchmarked against competitors, and where can it be managed more independently and on a value basis?
Many companies deal with this complexity through manual processes and sophisticated Excel models. But this approach is time-consuming, error-prone, and often leads to excessive simplification in pricing, reducing the differentiation that is actually required. The growth of e-commerce in the B2B sector is making the situation even more difficult by increasing price transparency. International customers frequently request prices from multiple national subsidiaries of the same company in parallel and sometimes receive significantly different quotations. Over time, this weakens the company’s overall price image.
Services
In addition to machinery and spare parts, many companies also offer a range of complementary services. Many manufacturers eventually realize that, much like spare parts sales, service sales require dedicated structures and appropriately qualified personnel. This is particularly true for digital services, which only a limited number of traditional machinery salespeople are enthusiastic about selling proactively.
Another complication is that, historically, many services were offered free of charge. As a result, sales teams often resist the introduction of new service offerings and separate pricing, especially where such services have long been used as negotiation concessions. Pricing and selling digital services therefore presents companies with new organizational, personnel, and commercial challenges. This is made even more difficult by the fact that manufacturers are used to pricing classic tangible products. With intangible digital products such as software, however, the variable production and procurement costs that historically underpinned pricing are no longer relevant.
Successive topline optimization with integrated solutions
New machines
New equipment from leading suppliers is often launched as a market innovation. The value created by that innovation must be systematically identified and clearly communicated to customers. Using tailored pricing methods, such as our proprietary PASST tool, the optimal price can be determined in line with both revenue and profit objectives. Methods such as Economic Value Added can also be used to quantify the incremental value of a new machine relative to a competing or predecessor model.
CPQ and Value Selling
For configurable new equipment, we work with our clients to define feature and performance packages that can be offered as add-on options within a pricing configurator. Ideally, this configurator is integrated into existing sales platforms such as the CRM as part of a CPQ solution (Configure-Price-Quote). This allows sales teams to calculate prices for different configurations directly with the customer and clearly communicate the value of each option.
This should be complemented by a set of mobile-enabled value selling tools. In many projects, we have therefore developed comprehensive sales toolkits together with our clients. These include elevator pitches, battle cards, reference cases, and value calculators that make it possible to quantify the benefits of individual options during the sales conversation. To ensure successful application of these tools, we also support our clients with sales training, including e-learning formats.
Aftersales / spare parts
Many companies still place too much emphasis on new equipment, while the spare parts and service business, despite being a critical profit driver, remains in the background of the primary sales organization. The sheer scale of spare parts portfolios, combined with often limited staffing in after-sales, frequently results in an overly reactive sales approach. Spare parts are not actively sold; companies simply fulfill existing demand.
This is especially true for smaller providers that have not yet established service sales as an equal commercial organization alongside primary sales. Companies need to act quickly to create the organizational foundations for successful service sales. This is particularly important in the spare parts business, where winning back customers after they have migrated to specialized parts distributors is often extremely difficult.
Pricing in the spare parts business
Pricing management is also a key commercial lever in the spare parts business. At this point in particular, pragmatic approaches can help achieve several objectives at the same time:
- improving profitability by two to four percentage points
- increasing sales in highly competitive product groups
- improving customer satisfaction and price image
- reducing manual pricing effort and minimizing errors through automation
Heuristic methods are particularly effective for pricing standard spare parts. They enable automated pricing that is anchored in cost, yet still reflects customer value.
Smart pricing tools
These methods can be supplemented by more advanced approaches for selected product groups. For example, competitor prices can be collected systematically and integrated into pricing logic, or fully value-based pricing methods can be implemented for selected categories. Once a new pricing logic has been successfully tested in a prototype, it is often advisable to implement dedicated pricing software along with self-service BI dashboards for analytical performance monitoring of the spare parts business. We have embedded our extensive expertise in spare parts pricing into our pricing software, nueprice.
Services
The sales and pricing of services, particularly digital services, often differ fundamentally from the approaches used for physical products. For hybrid services, the first step is to establish cost transparency. In many cases, simply breaking down the cost price of individual services in detail helps raise awareness within the sales organization of the need for consistent price realization. This creates a stronger understanding of the value of the services delivered.
The second step is to quantify the customer value of those services. What value does the service create for the customer? What alternatives does the customer have? More advanced approaches include service contracts, bundling multiple services, and combining services with new equipment sales. For digital and hybrid services, we have developed a dedicated pricing framework to address the demanding requirements of these new offerings in a structured and systematic way. This framework is already being used by numerous companies to design new pricing models. It provides clear guidance for pricing software as a service (SaaS) as well as a wide range of hybrid solutions.
Experience and project examples
Prof. Roll & Pastuch has extensive experience in industrial goods and mechanical engineering. In numerous projects, R&P has supported companies in addressing the complex challenges outlined above and in implementing integrated commercial approaches. Our core project focus areas in this industry include, among others, the following topics:
- Building service-centric sales organizations
- Potential-driven service and spare parts sales
- Innovation pricing for new equipment
- Designing new business models such as Equipment as a Service
- Go-to-market strategies for innovations
- Development and introduction of value selling methods
- Sales & negotiation training in the context of value-based selling
- Systematic pricing of digital services and hybrid offerings
- Spare parts pricing and pricing automation
- Selection of pricing software selection and implementation support
- Use of AI (artificial intelligence) in controlling
Unlock your true profit potential
We recommend tackling these diverse challenges in a step-by-step manner. In our projects, we develop a detailed roadmap that uses an integrated approach to achieve sales and pricing excellence. By successively optimizing pricing and sales across new equipment, spare parts, and services, companies can unlock substantial profit potential even during the transformation process. This approach ensures both strong internal buy-in and the financial sustainability of the project.
Prof. Dr. Oliver Roll
Prof. Dr. Oliver Roll is Managing Partner at Prof. Roll & Pastuch. He is one of the leading pricing experts in the DACH region and has led pricing, sales and strategy projects for numerous international companies. Furthermore Prof. Roll is a key note speaker on the topic of price management and has published numerous articles on various aspects of the pricing process. Prof. Roll holds the chair of “Price Management” at the Osnabrück University of Applied Sciences.
Kai Pastuch
Kai Pastuch is Managing Partner of Prof. Roll & Pastuch. Before joining as Managing Partner, he was Director at a leading international strategy and marketing consultancy. As a graduate in business informatics, he also manages our software company nueprice, which specializes in the pricing of spare parts with the product of the same name. Mr. Pastuch has extensive project management experience from numerous projects for large international companies and German medium-sized businesses in the areas of price management, marketing, sales and strategy. In addition to numerous publications in renowned journals and the publication of the reference books Praxishandbuch Preismanagement and Big Deal Management, he is a sought-after moderator and speaker on all aspects of sales and pricing. As a practice-oriented manager, he likes to get personally involved in our projects and contributes his broad experience in workshops and steerings.