Eureka Case 25 min Marketing

Eleven Customers Listening

You are Marina Quesada, commercial director of Caldorra Industrial Services. RefiCosta, a refinery in Costa Rica, wants to buy your predictive-maintenance platform, but its procurement chief wants it 25% cheaper by May 15. And whatever you charge here, the eleven refineries behind it will hear about.

The situation

Sentinela reads the sensors on compressors, pumps and turbines, detects anomalies and tells the maintenance team which assets are about to fail. In Caldorra's flagship sites it has cut unplanned downtime by 40% to 60%. Delivering it costs about US$200,000 per site per year. The price book, built as cost plus a markup, lists it at US$480,000 a year, and the sales team usually closes between US$380,000 and US$420,000 after a "standard" discount of 15% to 20%.

RefiCosta processes 250,000 barrels a day. At a discovery workshop its reliability-engineering manager, Patricia Solano, summed up the previous year in three figures: 47 unplanned downtime events, 210 hours of lost throughput and about US$21 million of lost margin. From those figures your team estimated the net value Sentinela would create for RefiCosta: US$3.95 million a year, mostly in avoided downtime, after subtracting what the refinery spends to integrate the platform and keep its data clean.

On March 30, Eduardo Vargas, RefiCosta's chief procurement officer, wrote that he would proceed at US$360,000 a year, 25% below the last offer, citing a quote from a comparable provider at US$340,000. You believe the quote is a bluff; the discount demand is not. Diego Restrepo, head of customer success, wants US$800,000: RefiCosta would sign quickly and Caldorra needs a reference customer. Carla Mendieta, head of product, wants an outcome-based contract: a base fee plus a share of the measured downtime savings. Your draft says US$1.8 million list, with room to close near 1.5. The CFO, Andrés Calderón, will take the number to the executive committee in six weeks. His reply to the value estimate was one line: "Beautiful number. So what do we charge them?"

Your job in this case: place the figures in circulation between cost and value, test what share of the value each price takes and who carries the risk if the estimate is wrong, and commit to a stance with RefiCosta that you could also hold in front of the next eleven customers.

The decision

What do you put in front of RefiCosta, and how do you answer Vargas?

  • A · Reference deal: US$800K and 10% off to sign
  • B · Value anchor: US$1.8M fixed, no discount
  • C · Shared savings: base fee plus a cut of results

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