A Venture Capitalist's View on Pricing Fixing and Collusion

I ran across this article and thought it would be interesting to share. This is one area of pricing that we discuss in many different contexts, but this gives us an interesting perspective outside of the global pricing arena and into how pricing can and does affect small businesses and start-ups.

For background, you need to start here, with "AngelGate": "So a Blogger Walks into a Bar."

Synopsis: A successful small businessman walks into a room full of some of the most powerful angel investors in Silicon Valley - people he counts among his friends - only to find that the mood is less than friendly. After assessing the situation, he comes to the following conclusion:

"So what’s wrong with this?

"Collusion and price fixing, that’s what. It is absolutely unlawful for competitors to act together to keep other competitors out of the market, or to discuss ways to keep prices under control. And that appears to be exactly what this group is doing."

Mark Suster, a highly successful two-time entrepreneur turned venture capitalist (who is also an active blogger who has followed the issue closely) provided an interesting commentary on this subject (in his blog "Both Sides of the Table") in which he looks at this issue from both sides and gives entrepreneurs advice on dealing with investor price fixing: "What Entrepreneurs Should do about Price Fixing"

He argues that A) the VC community (like AngelList) is small and B) yes, they talk because they are also interested in the same industries. One the other hand, investors are going to talk to other investors to help them make decisions on investments:

"My assertion was that information flows outside of their process. People call each other. People call their friends. They’re not in search of price fixing or collusion, they’re in search of diligence information about the company."

So from a pricing perspective, what is the absolute truth? Probably something in the middle - depending on which side you are coming from. As many in the pricing profession know, changes in American Pricing laws have challenged or effectively eliminated formerly convenient and narrow rules of thumb, resulting in a great deal of pricing freedom. But how far is too far? (If you are joining us in San Francisco next month for the Fall Pricing Conference, you should consider registering for a new workshop addressing this issue: "Making Pricing Flexibility Under the Law Work for You")

Any pricers out there that have been following this story and want to weigh in? I am interested to hear what others in the pricing community think of this unique pricing debate!

Want more? "AngelGate: The Sequel"

United Rentals Inc. Deploys Zilliant Solutions to Enhance Pricing Operations Across Branch Network

Check out this exciting announcement from PPS Partner and Member, Zilliant:

United Rentals Inc. Deploys Zilliant Solutions to Enhance Pricing Operations Across Branch Network

World’s largest equipment rental company adopts price optimization to improve rental rates management across North America

Austin, TX – September 1, 2010 – Zilliant, the leading provider of price optimization and margin management solutions for B2B manufacturers, distributors, high-tech, and industrial service companies, today announced that United Rentals, Inc. (NYSE: URI) has deployed Zilliant Margin Maximizer and Margin Insight solutions across its integrated network of over 550 branch rental locations in 48 states and 10 Canadian provinces. United Rentals is also piloting Margin Manager with an expected full roll-out in early 2011.

“As the market leader, we sought to employ a tool that could offer us a rigorous pricing methodology to support our customer segmentation strategy and increase the effectiveness of our sales force,” said Michael Kneeland, CEO, United Rentals. “We selected Zilliant because the company has demonstrated success with their price segmentation and statistical scientific software technology that specifically addresses the pricing challenges we face every day.”

United Rentals deployed Zilliant Margin Maximizer to improve the quality and accuracy of customer rental rates to maximize return on assets. District and national account managers will leverage Zilliant Margin Manager to gain detailed visibility into the pricing performance of rental agreements and streamline the customer rental experience. Zilliant Margin Insight provides the organization clear visibility into margin and revenue performance across all branches, enabling them to take necessary action to on pricing opportunities quickly. Sales teams in the field also have the ability to access market-based rate guidance directly from mobile devices, ensuring quick and accurate transactions.

Zilliant's industry-leading Margin Maximizer and Margin Insight price optimization and management solutions improve all facets of B2B pricing — segmentation, analysis, setting and execution — increasing margins and maximizing profits. Margin Maximizer optimizes prices, reduces risk in the marketplace, minimizes over-discounting in the field, and drives dramatic improvements to operating margins, while its analytics counterpart, Margin Insight, delivers deep visibility into over-discounting patterns, quoting errors, cross-selling opportunities, off-invoice margin erosion, and cost-to-serve variances.

“Partnering with United Rentals reinforces Zilliant’s position as the leading provider of price optimization solutions in the equipment rental space,” said Greg Peters, CEO, Zilliant. “We are excited to work with the largest company of this type in the world, and are pleased to see United Rentals experiencing significant margin lift and greatly improved financial performance because of our technology.”

United Rentals, Inc. will present an in-depth look at its approach to rate optimization at Zilliant’s Executive Pricing Summit, September 22 in Las Vegas. The free, invitation-only Summit will focus on maximizing margins and minimizing risk during a recovery. Request an invitation here.

To keep on top of Zilliant developments, news, events and happenings please subscribe to Zilliant’s RSS Feed.

About United Rentals
United Rentals, Inc. is the largest equipment rental company in the world, with an integrated network of 554 rental locations in 48 states and 10 Canadian provinces. The company’s approximately 7,400 employees serve construction and industrial customers, utilities, municipalities, homeowners and others. The company offers for rent approximately 3,000 classes of equipment with a total original cost of $3.8
billion. United Rentals is a member of the Standard & Poor’s MidCap 400 Index and the Russell 2000 Index® and is headquartered in Greenwich, Conn. Additional information about United Rentals is available at unitedrentals.com.

About Zilliant
Zilliant is the leading provider of price optimization and margin management solutions for B2B manufacturing, distribution, high-tech, and industrial service companies. Zilliant uses existing transactional data to improve decisions across all facets of price analysis, price setting and execution. Zilliant helps companies achieve the best pricing possible on every deal, agreement, and price list, increasing profits by tens of millions of dollars. Headquartered in Austin, Texas, Zilliant is a privately held company. For more information contact Zilliant at 877.893.1085 begin_of_the_skype_highlighting              877.893.1085      end_of_the_skype_highlighting or visit www.zilliant.com.