Transcript Slide 1

Effectively Pricing the Value Proposition
Jeffrey Tripp Director – Administration, Hurstville City Council
Narayan van de Graaff Managing Director, Advanced HR Solutions
Road Map
The Need / Opportunity
Hurstville City Council project program
Key training content
Outcomes/impact on results
Applicability for other Councils
Conclusion/key points
Effective Price Re-Setting Workshop 2015
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Criteria Results
Hurstville City Council
BENCHMARK
RESULT
MEETS FFTF
BENCHMARK
Operating Performance Ratio (greater or equal to break-even average over 3 years)
-0.011
NO
Own Source Revenue Ratio (greater than 60% average over 3 years)
82.93%
YES
Building and Infrastructure Asset Renewal Ratio (greater than 100% average over 3 years)
52.39%
NO
Infrastructure Backlog Ratio (less than 2%)
0.89%
YES
Asset Maintenance Ratio (greater than 100% average over 3 years)
87.27%
NO
Debt Service Ratio (greater than 0 and less than or equal to 20% average over 3 years)
1.88%
YES
Decreasing
YES
A decrease in Real Operating Expenditure per capita over time
OVERALL RESULT
The Council does not meet all seven of the Fit for the Future Criteria
Current Price-Setting Practice
 National/Vic Surveys: Most Councils simply add CPI
 Few recoup all fixed and/or indirect costs
 Often little commercial rigour applied
Project Program 2013 - 2015
Oct 2013
Participant
Preparation
June 2014
Council Adopts new
Fees & Charges
Dec 2013
One-day
Workshop
Feb 2015
Workshop:
Review ‘14
Outcomes
Feb 2014
1/2 Day Workshop:
Peer Review
June 2015
Council Adopts new
Fees & Charges
Key Content: Day One (Dec 2013)
Links to Integrated Planning & Reporting
 Pricing links to IP & R
 Hurstville Council’s financial realities
 Links to Quadruple Bottom Line
Elasticity of Demand/Supply
 Price elasticity of demand (and supply)
 Various determinants of elasticity
 Elasticity of demand for Council services
The Power of Pricing
 Traditional focus on costs, not pricing
 However, pricing has greater bottomline leverage
 DuPont exercise to demonstrate power of pricing
 Impact of Fees & Charges on 2014 Council income
Conscious Pricing
Fees & Charges
(your area)
Council Pricing Pricing
Code Principle Basis
Rationale/Principle
 Regulated
 Zero Cost Recovery
 Partial Cost Recovery
 Direct Cost Recovery
 Full Cost Recovery
 Market Pricing, etc.
Reason for choice
Key Points:
Not just annual CPI increase
For each Fee or Charge:
Which principle is relevant?
What are industry / market
benchmarks?
Marketing and Advertising
 The six P’s of Marketing
 What is our competitive advantage?
 What is the message?
 Which media should we use?
Peer Review Feb ‘14: Proposed Fees & Charges
 Managers explain rationale for proposed fees & charges
 Peer and facilitator feedback given to each presenter
 Extra material on marketing strategies/advertising media
Key Content: Workshop Feb 2015
Impact of New Fees and Charges
 Impact on year’s financial results
 Non-financial benefits (eg- compliance)
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Improvements to Methodology
How are new prices communicated internally
and externally?
What systems and documents need updating?15
Pricing is not the only factor....
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Financial Results
19 fee increases >10% = $430kpa
additional income
• 11 price reductions >10% = 43%
increase in volume
• 29 new charges = $100kpa additional
revenue with no incremental cost increase
•
Operational Benefits
• Community utilisation of rooms/halls up by 18%
• Increased building inspection/certification
services with greater rigour/compliance
• New fees recovering costs for statutory services,
easing the Rate burden on non-users
• Late fines on children’s library assets have
decreased overdues by 62%
• Price increases at our market-leading Child Care
Centres give room for competitors to improve
their quality/service offerings to our community
• Demand relieved on facilities operating at or
above capacity (eg- Gym/Aquatic Centre)
Culture Change
“I thought all my fees were set by legislation, so didn’t feel
the Effective Price-Setting program would be relevant to
me. I was amazed at the range of user-pay charges
applied by other Councils and scope I had within the
statutory guidelines to cover my team’s costs. We feel
more confident now in applying a wider range of fees,
charges, recoveries and contributions.” (Development
Assessment Manager)
“My team’s focus is improving safety and built-form
compliance on development sites. I was delighted when
my proposal to reduce inspection and certification fees
was approved by Excom and Council. Our market share
against Private Certifiers is turning around and we are
introducing a further discount to developers who appoint
us as certifiers when lodging their DA.” (Building
Compliance Manager)
More Culture Change
“We thought we would have an uproar if we introduced a late fine on
children’s assets. But by just charging 20 cents per day on
books/toys we decreased overdues by 62%. We only got 2
complaints but have drastically improved availability.” (Library
Manager)
“The vacancy of our auditoriums and meeting rooms was high and
we were struggling to cover fixed costs. By reducing our hourly hire
fees we improved utilisation by 18% and actually increased revenue
by 2%! We are going to introduce a Public Holiday surcharge next
year to ensure the extra labour costs are not shared amongst other
clients.” (Entertainment Centre Manager)
“We have made so many improvements this year, I want the next
Price Re-Setting module to be extended to my Supervisors and
Team Leaders.” (Engineering Services Manager)
Summary
SUCCESS!!
Enormous potential for other Councils across
Australia to reap the similar benefits
Training for Other Councils
Workshops delivered to 9 NSW Councils in 2014
Interested in this Program for your Council?
Narayan van de Graaff
Phone: 0438 792 300
Email: [email protected]
Website: advancedhr.com.au
Jeffrey Tripp
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