You are on page 1of 21

Telco Pricing Introduction

Sharing Session
2013
| 2
Price in Marketing Mix
It quantifies value and determines profit
It expresses the value of the exchange relationship
Price is.

Place

Promotion

Price

Product
Cost
Cost
Cost
Revenue
Pricing is main element in marketing mix who
contribute in revenue for company
Changes in price are more readily
implemented than the other 3Ps
Product - major re-investment
Place - find and convince new distributors
Promotion - long time scales/involves outside
agencies
MAXIMIZING PROFIT
Pricing objectives:
Marketing Mix:
| 3
What is the Customers Want from Us (Company)?
Price is not always the most important factor in influencing sale
The customer considers what he/she gets for the price paid; the seller must offer value
What causes them to conclude that they paid too much or got a great deal
Some costumers are interested in getting low price, while the other more interested in
quality, brand, etc
Consumer are often prepared to pay more if they expect to get added value
| 4
Value & Brand
Hammer
Rp. 199,000
Zara
Rp. 649,000
Versace
Rp. 1,999,000
| 5
Value & Brand
Air Asia
Pramugari Cantik
Murah
Nggak pakai bagasi

Lion Air
Pesawat baru
Sering telat
Sering insiden
Garuda Indonesia
Jarang telat
Dapat makan
Pramugarinya senior senior
| 6
How to Measure??
Males & females
12-65 years old
From all SES (Socio
Economic Status)
Current HP users or
potential users (plan to
buy HP in next 6 months)
Respondents
Criteria
Starting Q1 2011, the
study covered 22 urban
cities and 14 rural areas in
10 Telkomsel regional
The data is then projected
into national figures
The total target
respondents is now 11,675
respondents
Coverage
Areas
Face to face interviews
were conducted at
respondents home
Fieldwork period :
July 2013
Stratified random
sampling with individual
listing method was applied
Additional booster on
main card users was
applied to have sufficient
sample base for analysis
Data
Collection
Actual Interviews :
11,836 respondents
HP Users :
10,292 respondents
Potential Users :
1,544 respondents
Sample
Achieved
Survey is conducted regularly to measure consumer perception to our product value. We conduct the
survey every quarter.
| 7
Result
Survey is conducted regularly to measure consumer perception to our product value. We conduct the
survey every quarter.
PROFILE MOTIVES
Network 33 +13 38 +14
Bonus & Rewards 19 -2 15 -2
Cheap SMS Tariff 17 -3 15 -3
Cheap Voice Tariff 14 -1 17 -
Cheap Data Tariff 5 -1 3 -1
Features & Facilities 4 -5 4 -4
Brand Image 4 +1 3 -1
Cheap Starter Pack 2 - 2 +1
Reliable Data
Connection
1 -2 1 -2
Attractive Ads 1 - 1 -2
%
Teens Adults
12-19 y.o. 20+ y.o.
% Responses Share In %
HP Users Profile
By SES
SES A
SES B
SES C
SES D
SES E


12-14 y.o
15-19 y.o
20-24 y.o
25-34 y.o
35-44 y.o
45+ y.o



Male 53%
Female 47%


Urban 56%
Rural 44%

5
16
44
23
12


26
22
13
19
8
12



52
48


53
47
Index %

-1
-6
-7
+5
+9


+5
-6
-3
-2
-2
+7



+3
-3


-3
+3
Gap
Avg : 25.6 yo. Avg : 33.2 yo.
Gap Gap
Other result:
Mobile phone
penetration
Demographic Profile
Barrier to use
handphone
Multiple Card Usage
Cross Brand
complimentary
analysis
Sample Questionnaire
| 8
Price Value Mapping
Premium Value
Rip-Off
Overcharging
High Value
False Economy
Medium Value
Super Value
Economy
Good Value
P
r
o
d
u
c
t

Q
u
a
l
i
t
y

Product Price
High Medium
Low
H
i
g
h

M
e
d
i
u
m

L
o
w

| 9
PRICING PROCEDURES
Determine
the
Objectives
Profiling the
Subscribers
Analyze the
Competitors
Determine
the Pricing
Simulate
Revenue
Impact
| 10
THREE KEY PRICING ELEMENT
Price Up Case

Price per Minute (RPM)/
Price per SMS (RPS)
Traffic
Menit/SMS
Subscribers
RPM and MoU will always show opposite directions.
When RPM is increasing, MoU will decrease
Oppositely when RPM is decreasing, MoU will increase
But it is not means direct loss or addition in revenue
Price Down Case Usually for acquisition

RPM increase
MoU is for sure will going down, except in special case
when subscribers is not sensitive with price. Eg.
Lebaran, New Year
Active subs maybe will go down
Things to note: price up or monetization is not a
guarantee that revenue will increase. Too much price up
will led to significatn decrement in active subs that in total
will result in decrement of revenue
RPM decrease from existing
MoU is for sure will going up
Active subs must go up
Things to note: price down is not a guarantee that
revenue will increase. Must compensate with
addition in subscriber base.
| 11
PRICE CHANGES/NEW PRICING TRIGGER
Why do we need price changes or new pricing scheme for our subscribers?? There are three things as a
triggers why we need price changes or new pricing sheme
Performance Issue Target Gap
We see that there is a gap from our target that cant be
reached by usual business. The gap can be everything,
subscriber, revenue, traffic, BEI, etc
Competitor Movement
Competitor launch new product which is we perceived can
be a threat to our product in the market
Special Request
Some ocassion or event need special product, to promote
our brand or to gain specific segment or to help people in
disaster or remote area. Eg: Sail Komodo, APEC, Disaster
| 12
How the Pricing is currently being defined
NEW
< 1 Year
RECENT
1 < x < 2
Years
A
B
OLD
> 2 years
POSITION IN MARKET

1
NETWORK

2
< 50%
Utilization
50 70%
Utilization
70 100%
Utilization
A B
C
3
TYPE PP - LONGEVITY SUBS

C
4
SUBS BEHAVIOR
Voice
Minded
SMS
Minded
A
B
Existing Tariff
(Customize)
Cloning Market
Leader Tariff
Build New
Price Scheme
A
B
C
PRICING TYPE

Sub
Branch
Sub
Branch
Sub
Branch
Sub
Branch
Sub
Branch
Sub
Branch
Sub
Branch
Sub
Branch
Sub
Branch
Sub
Branch
Sub
Branch
Sub
Branch
Cluster
SIZE AREA APPLIED

Branch A Branch B Branch C
A
B C
Data
Minded
C
| 13
It creates variation of pricing drivers among product, plan, & regions
Zona Marking: pricing based on cluster. Each cluster may have different pricing for optimization purpose, regional starter pack
for acquisition purpose
Sub
Branch
Sub
Branch
Sub
Branch
Sub
Branch
Sub
Branch
Sub
Branch
Sub
Branch
Sub
Branch
Sub
Branch
Sub
Branch
Sub
Branch
Sub
Branch
Cluster
Branch A Branch B Branch C
A
B C
Current pricing situation shows different drivers in every subscribers across brand, LoS, and Area
RPM ARPU S/sub RPS M/sub
Area 1
Area 2
RPM ARPU S/sub RPS M/sub
Area 3
RPM ARPU S/sub RPS M/sub
Area 4
RPM ARPU S/sub RPS M/sub
| 14
The market offers a large number of different price plans, complexity is
inevitable
Many different price plans in Indonesia across Regions and Length of Stay whose complex tariff structure with multiple
bonus/package offers

54 pricing Zones in OCS enable us to set different pricing across cluster
Total 16 Price Plan for simPATI, 10 of them
are having zone based schema
Total 14 Price Plan for kartu As, 11 of them
are having zone based schema
Area 1 : 15 zones
Area 2 : 9 zones
Area 3 : 16 zones
Area 4 : 11 zones
Special : 3 zones
Total 54 pricing zones until today inc. 3 special
zones
Each price plan can have different tariff
schema in each zone
Each additional offer can have different
offering schema in each zone
Product pricing consist of combination
between price plan and additional offers
4 Zones in 09 17 Zones in 10 26 Zones in 11
47 Zones in 12 54 Zones NOW 60 Zones in EOY
| 15
Granularity is the key for optimization: Pricing based on time, traffic, cluster, and
Length of Stay
Many different price plans are offered in the market
o Approximately 30+ distinct price plans for
Telkomsel alone, some of which come in
multiple geographic variations
o Price Plan also indicates subscribers LoS
Packages and add-on bonuses result in a large
number of possible combinations
o Preload Benefit
o XgetY scheme
o Packages, etc.
Moreover, many of the plans are highly complex
More price plan creates more granulality hence
create rooms for optimization
Zone based pricing give rooms for different pricing
across cluster
By Traffic
By Time
By Cluster
By Price Plan
1
2
3
4
Exploit the Legacy
| 16
Existing price plan in OCS zone
based
Total 16 price plan for simPATI, 10 of them are having zone based schema
Total 14 price plan for Kartu AS, 11 of them are having zone based schema
Kartu AS
Nationwide
Zone Based
Nationwide
Zone Based
6
3
11
Ekstra, Broadband, Internetan, Seharian,
Semalaman, Jagoan Nelpon
Regular, Super, Jagoan Serbuuu
Price Plan # of type
PeDe 4
Freedom Call 7
Gratis Berjam-jam 6
Freedom 2 Choose 3
Puas 2 6
Puas 2 Regional 6
Shuffle 6
New Facebook 2
Facebook 3
Loop 4
Price Plan # of type
Rp. 20 2
Rp. 0 4
Ozone 7
Extra Ampuh 4
Madura 3
Promo Regional 5
Madura 2
Gratis Nelp 30jam 24
New Regional 4
Gratis 100X 8
Gratis 100rb 5
10
Price Plan in Telkomsel
| 17
Assessing the Impact
Two big
pricing
moves
Launch new product to
attract new subscribers
Change existing tariff
Potential additional revenue Potential revenue
threat
Competitor subscribers
move to our network
Our subscribers move to
new product which
usually have lower tariff
Our subscribers increase
their usage
If we change tariff too
high, subscriber will
move to our competitor
SIMULATION
Data needed:
Duration per call
ARPU
Subs profile: LoS, place
Data usage
SMS usage
Voice usage
Traffic per hour

Market share
Recharge transaction
Recharge share in outlet
Competitor product
Handset penetration
| 18
Basic Tariff based on Pricing Zone
Two major system in our IT is involved for pricing:
OCS Reflex
Rating & Billing System
All subscribers profile are stored in OCS
Responsible rating & billing for all event
All tariffs, bonus, package will be created in
OCS
OCS will charge subscriber based on LAC-CI &
price plan

Provisioning System
Responsible for provisioned package that
purchased by subscribers. Eg, Talkmania,
Jagoan Serbu, Blackberry, Flash, etc
Reflex will provision subscribers based on
some factor like LAC-CI, price plan, time, etc
In Reflex, LAC-CI are grouped into home.
Pricing & offering can be differentiate
between home
| 19
Basic Tariff based on Pricing Zone
How a subscriber is being rated in OCS based on the price plan and pricing zone
HLR/MSC SCP OCS
Location = LAC-CI Location = LAC-CI
Location => Zone
Tariff => Zone & Price Plan
Based on LAC-CI, OCS will
determine pricing zone, and
which PP type subscriber will be
rated
FR RB
Location => Zone ID Tariff = PPs type
based on the zone
CGI Cluster Zone ID Category
51010xx Surabaya 21 Jtm
Regular
51010xy Malang 22 Jtm
Reguar
51010xz Jember 13 Jtm High
51010yx Jombang 14 Jtm
Medium
51010yz Madura 24 Madura
Use Case
Subscriber A with PP1 calls from Madura
SCP sends the LAC-CI of Madura
OCS translated LAC-CI as zone 24
Based on the pricing table, subscriber will be
rated as PP1, type E
Reference Table: 2x per week
Common ID
Reference Table Billing and Rating
Type of Changing the Tariff:
Moving Cluster to different Zone
ID
Creating new type of Tariff in
particular zone
Changing the tariff itself
Zone ID PP1 PP2 PP[n]
13 A A A
14 B C C
21 C D C
22 D F B
24 E A E
| 20
Package Tariff and Bonus based on Pricing Zone
How a subscriber is being rated in Purchasing Packages
HLR/MSC Reflex OCS
Location = LAC-CI Location = > LAC-CI
LAC-CI => Home (group of LAC-CI) Reflex
Home Reflex => Pricing & Offering
CGI Home Service Pricing Offering
51010xx Sibolga TM ON Siang 3500 150+50
51010xy Malang TM ON Siang 3000 100+50
51010xz Semarang TM ON Siang 2500 150+50
51010yx Jabotabek TM ON Malam 3000 50+50
51010yz Malpua TM ON Malam Restricted
Type of Changing the Tariff and
Offering
Creating new Home or splitting
Changing Tariff
Changing Offering
Reference Table
Eligibility Rules
Mapping Pricing & Offering
Pricing Catalog
Offering Catalog
Offering and Pricing can be mapped by:
LAC-CI (home)
Tariff
Package Value
Registration Time
Price Plan
Thank You

You might also like