Pricing Review – SPR

April 2012

YTD Requests Line Items: Price Approved as Requested (October -December 2011)

Request Type

# of Line Items: Price Approved as Requested

# of Line Items: Price Approved as Requested with $1

of Bookings Hit Rate %

Price Approved as

Requested Expected Bookings

Price Approved as Requested Actual

Bookings Performance %CCR 41 5 12.2% 2,529,945$ 62,068$ 2.5%MCP 1055 179 17.0% 164,653,352$ 7,997,251$ 4.9%NDR 858 86 10.0% 1,337,290,509$ 2,359,352$ 0.2%DVP 719 67 9.3% 77,598,707$ 239,330$ 0.3%OSP 9 0.0% 418,934$ 0.0%Total 2682 337 12.6% 1,582,491,447$ 10,658,001$ 0.7%

YTD Requests Line Items: Requested Price Countered (October -December 2011)

Request Type# of Line Items:

Countered

# of Line Items: Countered with $1

of Bookings Hit Rate %Countered Requests Expected Bookings

Countered Requests Expected Actual

Bookings Performance %CCR 121 15 12.4% 6,829,088$ 212,601$ 3.1%MCP 1556 111 7.1% 246,980,000$ 446,277$ 0.2%NDR 621 40 6.4% 413,630,046$ 351,129$ 0.1%DVP 1150 96 8.3% 261,047,877$ 358,658$ 0.1%OSP 22 0.0% 95,132$ 0.0%Total 3470 262 7.6% 928,582,144$ 1,368,665$ 0.1%

YTD Requests Line Items: Total (October - December 2011)

Request Type# of Line Items:

Countered

# of Line Items: Countered with $1

of Bookings Hit Rate %Countered Requests Expected Bookings

Countered Requests Expected Actual

Bookings Performance %CCR 293 22 7.5% 17,332,139$ 298,147$ 1.7%MCP 4564 291 6.4% 652,678,131$ 8,451,701$ 1.3%NDR 2247 127 5.7% 1,854,392,076$ 2,724,587$ 0.1%DVP 2481 167 6.7% 371,755,710$ 617,796$ 0.2%OSP 31 0.0% 514,066$ 0.0%Total 9616 607 6.3% 2,896,672,123$ 12,092,232$ 0.4%

Channel SPR Request Performance

BOOK PRICE? COMPETITIVE?

• Many of the sales today are not willing to try the book price because

they lack faith in the pricing. We also tend to feed this view by;

– Giving special pricing on requests with small qty or where no

competitive information was provided.

– When sales ask what price is reasonable with no information from

the customer on competitor etc and we don’t refer them to the book

price.

– When we allow for discounting on our existing price structure

without proper market/profit analysis.

• The quickest way to get them to change the perception is for YOU to

believe in your pricing and for them to have some wins with the

current book price level.

BOOK PRICE? COMPETITIVE?

• GPL 236 – ASIA POS STUDY vs OEM BOOK PRICE LEVEL

– Last 12 months data.

• 10575 line items with avg price falling in the BOOK PRICE RANGE.

• 3906 line items with avg price falling outside of book range.

GPL 236 POS AVG PRICE

INSIDE BP RANGE73%

OUTSIDE BP RANGE

27%

INSIDE BP RANGE

OUTSIDE BP RANGE

二〇二三年四月十日page 5 /

Why “Special Price Request” ?

when there is no book price published in the region, QTE (SAP Quote).

when they need to follow OEM contract price, FAP (Follow Agreement Price).

when there are solid reasons/justifications, MCP (Meet Competitive Pricing); NDR (New Design Registration) – Only for Distribution; CCR (Competitive Conversion Request) – Only for Distribution; CSS (Clear Stock Selling) – One Time Deal Coming Soon !

Types of Pricing Request and Application Requirements

1) Meet Competitive Pricing (MCP)

Mandatory information to put in the request:

Target price

Competitive price

Competitor name

Competitor product name/description

If the mandatory information is not provided, the request will be rejected !

2) QTE (SAP Quote) No Standard Price is available in E-CommerceNeed background information on why this PN is neededRequest shall be rejected if business information is inadequate

3) New Design Registration (NDR) Applies to situations where a distributor has a direct and substantial role in

identifying or creating demand for eligible TE Products The minimum value per line item is 5,000 USD The validity of a NDR is 2 years. During this period TE has the right to revoke the

registration without liability to the distributor if customer could not fulfill the committed order qty.

The ID number provided along with the approval of the NDR has to be inserted in the Pricing Request. If not provided, the pricing request will be rejected.

4) Competitive Conversion Request (CCR) Brand new business / Project The minimum value per line item in a CCR request is 5,000 USD The validity of a CCR is 1 year. During this period TE has the right to revoke the

registration without liability to the distributor if customer could not fulfill the committed order qty.

Types of Pricing Request and Application Requirements

5) FAP (Follow Agreement Price/contract price) End customer/ultimate end customer must be with TE Letter of Authorization (LOA) or approval document from the Agreement owner

must present Valid only when end customer/ultimate end customer has an effective

agreement price fixed with TE & meet/above the MOQ

6) CSS (Clear Stock Selling) Coming Soon !? A special price to clear stock that may become dead stock if not sold for

any dollar value Normally it is at “One Time Deal” or within a very short offer period.

Customer may place one single order for the whole lot stock.

Types of Pricing Request and Application Requirements

Matrix of Request Types and Requirements – AP

* NDR & CCR – for Distributor use Only

Type ofRequest Products When to Use

POSInformatio

nEnd

CustomerTargetPrice

Competitor Name

andProduct

Competition Price LOA

Pre-ApprovalRequired

MinRequested

Qty or Value

defaulPricingValidity

PriceValidity Comments

MeetCompetitive

Pricing(MCP) All Products

A price is offered tocompete with adefined competitor towin TE business Y Y Y Y Y

Must be MOQor multiple ofMOQ/ MinOrder Valuesfor GPLs

next yearend 12 Months

Notification should beprovided to TE if businesswas won. CompetitiveSituations will be tracked forperformance and may besubject to price changes

New DesignRegistration

(NDR) All Products

A special price maybe offered only to thedistributor whocaused TE product tobe designed into anew application Y Y Y

USD $5,000per line itemminimum 730 days 12 months

Requires pre-approval withSales. New designs only.Term 24 months with 12month review of performance.Discounts only provided todistributor who designed inproduct.

CompetitiveConversion

Request(CCR) All Products

A special price maybe offered whenconverting existingbusiness to TE Y Y Y Y Y

USD $5,000per line itemminimum 365 days 12 months

Replacement or conversion toa TE product at an accountthat shows no sales or POShistory for 12 months prior toconversion.

FollowAgreement

Pricing(FAP) All Products

Used when aCustomers'agreement price isrequired forpurchasing TEproduct Y Y Y

Must be MOQor multiple ofMOQ

next yearend

Based onCustomerAgreementterm orLOA timeframe

Letter of Authorization isrequired from Customer priorto use of a agreement price.No added discount provided.

SAP Quote(QTE) All Products

When no Valid Pricein SAP

Must be MOQor multiple ofMOQ 30 days 30 days

follow up book price set up (ifneeded)

Important NotesAll the above mentioned are required to comply with the followings: Valid for active TE part; correct SPR type is chosen Information put in SPR should be true and correct to the best knowledge End customer information is required on Header page in GPMS and

ultimate end customer must be identified if it is a subcontractor Require accurate order qty in Annual or Project base. TE might revoke

the price if customer fails to fulfill the application requirements, e.g. the committed order qty.

The official valid period for a special price is 30 days in general although it might be valid with a longer period in our internal record.

Special Price upon expiry will NOT be renewed automatically. Request shall be submitted again together with all updated justifications for Pricing approval.

Book price will be offered if concrete reasons/justification is insufficient. No special price quotation is legitimate ONLY IF it is reviewed and

approved by Pricing Team – Don’t pre-commit special price to customers !

二〇二三年四月十日page 11 /

Inaccurate information: Req#:001269805

Why PMS and DVP shall be removed?

Original Intention/Initiator Actual Use/Effect Today Reasonale to Remove them

Sales to seek busy PM ok to avoid pricing question on justification

Book price basically reflects the product strategies or book price shall be revised

Initiated by sales/distributorsPrice further lower than book price shall major due to competition hence MCP be more appropriate

Mainly trivial individual request than major product strategy

PM can lay down policy for specific product strategy

An option to avoid getting and giving competition information

Major price erosion drivers

Use by distributor to make pricing as volume drivers

Volume discount is already facilitated by column book price

Always trivial individual requests instead of major product pricing penetration strategy

Price lower than book price range shall mainly due to competition hence MCP more appropriate

An option to avoid getting and giving competition information

PM can have the policy set up with PA

Major price erosion drivers Loss of chance to gather competition information

Loss of chance to gather competition information

PMS (Product Manager Strategic Pricing)

DVP (Distribution Volume Discount)

Initiated by PM

To support PM's major product strategy

Support PM's skimming strategy

Initiated and supported by PM for specific distributor partners with good plan