Fair Price

The Fair Price (commonly called Peer Price in the US) is a reference price paid by comparable customers.

Concept

To put it into perspective, Fair Price is the average level (among similar customers) of the price index depending on price major explanatory variables. This means that a customer charged above the Fair Price is paying more than its peers and, thus, should be treated cautiously and benefit from service level improvement. On the opposite, a customer charged below the Fair Price is paying less than its peers and should either see its fees be raised or benefit from basic services.

Calculation

The Fair Price is calculated by gathering prices paid by all customers and running a statistical analysis (multilinear regression). The variables used to run the analysis are the ones explaining the differences in terms of prices among comparable customers (e.g. customers from the same industry ordering the same product/service). Several explanatory variables can be taken into account to run the analysis, such as customer characteristics (Gross revenue, revenue growth, industry, geography), product mix, transaction profile as well as service performance.