 "Pricing: Multi-Treasury Model")
Competitive pressure requires income and risk-adjusted pricing
Banks are focusing more strongly on the private customer segment and thus the competitive pressure is further increased. As a result, the margins are decreasing or it becomes more difficult to achieve the same margins. On the one hand, banks have to provide the market with attractive standard conditions, on the other hand, the deals must generate a profit contribution after all costs for financing, risks, processing etc. have been deducted.
Target margin-oriented and contribution margin-compliant pricing
The pricing component provides support for this balancing act. Before the contract is concluded, it facilitates the definition of conditions for a deal through individual pre-calculation, both from a present value and a periodical perspective. The methods and configurations used are the same as for ex-post sales controlling. Funding costs are taken into account in the same way as liquidity costs, risk costs, unit costs and indirect costs. Deal conditions which are calculated in this way guarantee adequate conditions with regard to the situation of the bank, the market and the actual deal and thus a quantified profit contribution. The minimum margin calculation helps bank officers to determine and take into account the limits of the conditions for the profitability of a deal and to propose alternative interest and payment conditions, if required.
- Pricing and sales control are based on the same calculation methods
- Pricing of individual deals before contract conclusion
- Calculation of products and sample deals.
