Objective
Spoornet, a South African rail transport company, commissioned Khulisa Management Services to
evaluate its pricing strategy for a turnaround initiative that was undertaken. The goal of this
assignment was to ensure that Spoornet’s pricing strategy aligned with its long-term business
sustainability goals and market conditions.
The evaluation reviewed Spoornet’s commercial environment, analyzed its existing pricing structure,
reviewed its general freight business and iron ore lines, and developed framework for a new pricing
strategy. Khulisa also provided recommendations on implementing and communicating the new
strategy.
Approach
Khulisa worked closely with over 30 Spoornet executives over five weeks to assess the current
pricing framework and to propose a strategic shift in pricing based on:
- Differentiated Pricing – Establishing a discriminatory pricing model that sets different prices
based on customer segments and value propositions. - Collaborative Pricing – Partnering with large customers to reduce costs and improve service.
- Market-Based Pricing – Balancing value by considering customer willingness to pay,
Spoornet’s investment capacities, cost structures, and market conditions. - Process and System Implementation – Developing new pricing processes, cost assessment
tools, and contract designs. - Communication Strategy – Implementing price signaling and public relations efforts to
manage customer expectations and reduce uncertainty.
Impact
The new pricing strategy was expected to improve Spoornet’s financial sustainability by shifting from
cost-based pricing to a strategic, market-driven model, enabling Spoornet to:
Maximize revenue by charging higher prices to less price-sensitive customers.
Increase profitability through better alignment of pricing with customer value and service
quality.
Enhance operational efficiency by integrating pricing into broader marketing and service
strategies.
Improve customer relationships through collaborative pricing models, creating mutually
beneficial arrangements.
Strengthen Spoornet’s competitiveness in the transport sector by optimizing pricing based
on industry best practices and global trends.